XM Satellite Radio will become available to consumers this summer. Dan Murphy, XM's vice president of retail marketing and distribution, recently talked with Staff Reporter Gail Kachadourian about XM's plans and the challenges XM faces getting its product off the ground.
Is satellite radio a hard sell for automakers?
Entertainment is something that is very personal for the average driver, and I would think that entertainment would be one of those that would survive any kind of cost-cutting programs that the auto manufacturers would put together.
What is the automakers' incentive to offer satellite radio?
I can't really get into the details. But there are various incentives for car companies to become involved with satellite radio and enjoy some of the revenue stream that is derived from the subscriptions.
Which suppliers are working on developing radios that accept signals from all satellite radio broadcasters?
A number of OEM radio manufacturers are working on a part of the interoperable radio solution. Interoperable radios have to go through a number of technology challenges. One of them is the user interface, which would allow it to control both the Sirius and the XM programming selection. Another challenge is interoperable antennas. The third and most important challenge is combining each other's respective chip set technology into a single chip set solution. Some of those challenges, particularly the first one, are a little easier to resolve.
When will XM launch its services?
We will launch nationally this summer coast to coast. Prior to that we will do a regional test during the springtime.
Where will XM's test market be?
We're keeping that confidential.
How do you envision the cost structure?
The automakers will take different approaches, depending on the various models and the demographics they're targeting. In some cases the automakers will provide XM Satellite Radio as a dealer option as soon as possible to allow customers to get involved in that. Some other models on the higher-end side might incorporate this as a standard option.
How do you plan to advertise satellite radio?
We are spending close to $100 million to educate the consumer about XM Satellite Radio. We have some incredibly strong and unique marketing promotions with people like NASCAR, where we will be at most of the NASCAR events, promoting XM Satellite Radio to that audience, and we even have a NASCAR channel that that audience can tune to listen to racing news and updates.
Have you considered taking XM global?
XM Satellite radio's license is for the continental United States. Obviously, car companies would like to see a more global technology incorporated, but that's not always the nature of the marketplace. In our case, since we are a U.S.-based technology, it does make it a little more difficult from a product-planning standpoint. But, that's not atypical in the technology world. Our primary focus is the United States.
Have you considered competing with Sirius by charging less for subscriptions?
A lot of our research indicates we're charging a lot less than we should be. No, we haven't really looked at making this a price-point issue, in terms of pennies.
Is XM interested in providing data, such as real-time traffic information?
Our focus is entertainment. Our short-term focus is to provide the best in satellite radio programming, basically to introduce the equivalent of cable for the car.
So XM is only interested in broadcasting music and entertainment at this point?
Exactly. Our technology does lend itself to do many other things because it's digital technology, and digital technology does not care if you're transmitting audio, data or video through it, and therefore there are certain types of other applications you could pursue in the future with our infrastructure. But there's such a demand for better audio content coast-to-coast.