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8/8/2005
Automotive Satellite Radio Market Growth ThreatenedStrategy Analytics |
New Strategy Analytics research, "In-vehicle Entertainment Systems Market 2004-2011," shows that automotive OEMs should be cautious about introducing satellite digital radio options, despite increasing adoption of satellite digital radio in the US.
There is an excellent automotive opportunity for in-vehicle satellite radio. Strategy Analytics expects the market for in-vehicle satellite digital radio in North America to increase from 5.2 million units in 2004 to 12.8 million units by 2011, in terms of shipments in the OE and aftermarket. XM announced it had exceeded 4.4 million subscribers in Jul-05, while Sirius had over 1.8 million subscribers by the end of Q2-05.
Explosive satellite radio growth seen over the last three quarters will not translate automatically into the automotive market however, and growth in general will slow down toward the end of 2005. In-vehicle satellite radio growth will face competition from portable satellite radio devices and HD Radio/iBiquity systems. 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 percent auto adoption. Satellite radio offered as a standard feature does not mean it will automatically become the standard for vehicle customers.
"XM and Sirius face competition from iBiquity's HD Radio. However, iBquity now needs to shift focus from radio station upgrades to consumer system upgrades," says Clare Hughes, Analyst with the Strategy Analytics Automotive Multimedia & Communications Service. "There has been significant investment in terrestrial radio station upgrade by iBiquity; however this now needs to be translated into revenue."
For a chart, "US Digital Radio Shipments: Satellite vs. Terrestrial," see http://www.strategyanalytics.com/press/PR00198.htm
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