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Why this holiday season will not be a cheery one for satellite radio

In this week’s satellite radio news:

Sirius’ new subscribers from car sales nearly doubled in the quarter to 462,749 from 236,464 a year ago, while retail additions slumped to 64,101 from 205,899 last year. Sirius’ CEO Mel Karmazin, speaking on a conference call with analysts, said the company was “a little perplexed” about the slow retail sales, but said he was expecting good demand in the holiday season.

Since Mel is “a little perplexed,” let me explain why the retail sales are slow. 1. There are tons of retail adoption barriers for satellite.

A terrestrial radio is “plug and play,” but a satellite radio is plug and plug and plug and activate and string and attach and stick and pray. Not so in the OEM market.

2. Most folks like their regular radios just fine, thank you very much.

And if you don’t have a radio problem, you won’t seek out a radio solution. If you have a problem in hearing exactly the songs you want when you want them, you don’t have a radio problem, you have an mp3 player problem, and you’re going to buy a new iPod.

3. In order to appreciate satellite radio you have to have satellite radio, but you can’t do that until you buy satellite radio.

Thus, the vicious cycle plays out at retail. Note that in the OEM market you can learn to appreciate satellite radio without buying anything (but a new car).

4. Have you ever visited the satellite radio section at your neighborhood Best Buy?

With all the models and attachments and home and car docks and cables and boomboxes and mysterious tuners (some of which instruct you to have a professional install them), it’s a confusing mess of only partially compatible products. And confusion discourages consumption.

So let’s see, where would you expect growth for satellite radio to occur, in the OEM market where you don’t buy a radio, you buy the car and the radio comes along (as standard equipment) for free – or at retail, where you can buy an iPod and be listening to music without spending your afternoon stringing wires into your trunk?

Since the holidays are a time for retail, not OEM, expect to see a lump of coal or two in a satellite radio stocking near you.

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