Sirius Satellite Radio sees several promising market segments to target when it begins service this summer. Staff Reporter Gail Kachadourian discussed Sirius' plans with Doug Wilsterman, Sirius' vice president of marketing and distribution.
What is Sirius' target market?
We have a couple of them. There are 210 million cars and light trucks out on the road right now. What we're looking at are people who spend a lot of time in the car. So there are 45 million people that commute every day an hour a day. There're probably about 7 million heavy trucks out on the road. There are people who are early adopters that just love music and music is important to them. There are people that live in fringe areas where they can't get radio. There are around 45 million people in this country who live in markets that have five or fewer radio stations.
The music business in the U.S., cassettes and mostly CDs now, is at about $14.2 billion. Twenty-seven percent of that market is CDs that are purchased in music genres and formats that are not available on any commercial radio station. In Detroit, there is no classical radio station. In New York City there is no reggae station.
What type of commitment are you getting from automakers?
DaimlerChrysler is an investor in our company. Ford has a similar situation. They have both made very aggressive statements about their desire to get this into their vehicles.
Have you had any discussions with Asian automakers?
Yes. Everybody who hasn't signed up yet, (including) Toyota, Honda ... when they introduce product, we've agreed together that that product should be interoperable, meaning it should be able to receive both (Sirius and competitor XM Satellite Radio) services.
Is satellite radio a hard sell to automakers trying to cut vehicle program costs?
There are a couple things that they're also trying to do, and one of them is to develop a longer-term relationship with their customers. Instead of just selling the car to you once, and maybe hoping that you'll come back and buy another one, they're trying to develop a relationship, and in doing that, satellite radio is a perfect vehicle because you do have this subscription-based arrangement. So there is a financial link. Daimler and Ford both have the ability if they choose to give their customers some kind of messaging on their system. They can use our pipe to talk. The other reason is financial. They both have investments in this company.
How are automakers preparing for satellite radio?
Ford is turning its normal practices of rolling out new products on its head. They're accelerating all of the things that they do to get new products into the marketplace. Because they're so aggressively pursuing this, they're going to do things that involve mass customization. They may take the vehicle off the assembly line and install the system outside of the normal assembly line practice to try to accelerate it.
Who are some of Sirius' receivers and antenna makers?
We've got folks like Panasonic, Kenwood, Clarion and Jenson, which are introducing aftermarket products. In the case of the original-equipment market, Visteon is obviously a supplier to Ford. Delphi is our other main OEM partner. There are some companies that do both: Panasonic, Clarion.
How do you envision the cost structure working?
There're a couple of different models that could be in place. The one that seems to make the most sense and the one you hear discussed the most is that the service is bundled in the price of the vehicle. It almost becomes transparent to the end user. Another possible way is that the product would be added on at the dealership.
Have you considered taking Sirius global?
It's not in our business plan for the time being. There's been a lot of interest from people in Europe and in Japan about doing something similar to what we're doing. We consult with them all the time and talk to them, and we share technology.