Auto Electronics

Analyst firm advises caution on satellite radio

The “explosive growth” seen in satellite radio over the last three quarters will not automatically translate into the automotive market, according to “In-vehicle Entertainment Systems Market 2004-2011”, a new report from Strategy Analytics.

Claire Hughes, an analyst in Analytics’ Automotive Multimedia & Communications Service, said that despite increasing adoption of satellite digital radio in the United States, “automotive OEMs should be cautious about introducing satellite digital radio options. Satellite radio offered as a standard feature does not mean it will automatically become the standard for vehicle customers.” Strategy Analytics expects the market for in-vehicle satellite digital radio in North America, including OEM and aftermarket units, to increase from 5.2 million in 2004 to 12.8 million by 2011. XM Radio said last month it had exceeded 4.4 million subscribers, while Sirius Satellite Radio had more than 1.8 million subscribers as of the end of June.

But satellite growth in general will slow down toward the end of this year, according to Hughes. In-vehicle satellite radio growth will face competition from portable satellite radio devices and HD Radio/iBiquity systems. “Satellite radio players also face tough marketing challenges that come from offering a subscription-based business model, as heavy satellite radio PR and marketing will not necessarily translate into 100% auto adoption,” she said. Hughes suggested that iBiquity “now needs to shift focus from radio station upgrades to consumer system upgrades. There has been significant investment in terrestrial radio station upgrade by iBiquity; however, this now needs to be translated into revenue."

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