XM Flexes its Muscle at CES

While SIRIUS announced Monday that it had finished 2004 with a little over 1.1 million subscribers, and announced a partnership Wednesday with Microsoft for mobile video in 2006, frustration may be setting in for the satellite radio service. Rival XM released several new products, announced it had 3.2 million subscribers and a partner showed a prototype of an in-car XM video system at CES, stealing the thunder from its smaller rival.

Among the new products introduced were two new portable players from Pioneer and new consumer electronics brand Tao. Both will retail for $349.99 USD, the same price as Delphi's MyFi, and will have similar features such as the capability to record programming.

Also announced was a "connect-and-play" XM radio, which looks much like the current home antennas from the company's manufacturers. XM says it will be the "only accessory needed" to receive programming through XM-ready radio devices.

On2 Technologies announced in a separate press conference that XM had selected its TrueMotion VP6.2 video compression technology for a future in-car video system, essentially trumping SIRIUS' announcement earlier Wednesday. According to On2, "competing video codecs failed to achieve" the quality and results XM was looking for.

And not to be outdone on the radio personality front, XM also made the announcement of several high-profile names to be added to the service's lineup, including ESPN's Tony Kornheiser, Dr. Laura Schlessinger and political commentator G. Gordon Liddy.

With all the positive news for XM, and a 3-to-1 margin in subscribers over its competitor, it points to a potential problem for SIRIUS. Shock jock Howard Stern is set to join the service next year, and he carries with him a half-billion dollar price tag. If the company cannot offset the cost with revenue from new subscribers, it could harm the company financially.

When asked earlier this week how they planned to even the playing field with their chief rival, the company refused all comment to BetaNews on the subject.

However, even if SIRIUS cannot manage to close the gap during the year, the satellite radio business is expected to continue to grow at an accelerated pace. The service says it will double its user base to 2.2 million, and XM expects to have 5.5 million customers by years end. XM CEO Hugh Panero also expects the entire business to become more profitable. "I believe that year-end satellite radio hardware sales could be a billion-dollar industry by 2006," he said.