XM Satellite Radio is raising the ante on programming content via a much-publicized new deal with entertainment giant Oprah Winfrey and is moving toward an industry leading 9 million subscribers.
But that's not all the company has in mind.
The satellite service, owned 5% by Honda Motor Co. Ltd. and 2% by General Motors Corp., is targeting a seriously expanded presence inside the automobile, with plans to offer everything from navigation-type services to onboard satellite TV.
Most of these features, developed at XM's Innovation Center in Deerfield Beach, FL, could arrive in new cars and trucks in as little as 12-18 months, XM executives tell Ward's. XM says its in-house engineering talent located at the Innovation Center helps give it a leg up on its satellite radio competition.
At the recent International Consumer Electronics Show in Las Vegas, XM unveiled its concept for in-vehicle video, demonstrating a system carrying eight channels of live streaming video — including broadcasts from Fox News and ESPN.
The system, developed with On2 Technologies, also allows downloads to a digital video recorder that could be viewed by passengers at any time.
The challenge, says Roderick Mackenzie, vice president-advanced applications and services, is the signal bandwidth needed to send video through the air. But Mackenzie says XM has narrowed that requirement by developing more efficient coding, and XM in July acquired additional signal spectrum from WCS Wireless with which to send it along.
“We've been using that spectrum to demonstrate the ability to get video into the car,” Mackenzie says. “(But) I think it's a couple of years away to have that all set up and the whole business model sorted out and the whole network built.”
Part of that task is determining where and how to get content for XM programming, Mackenzie admits.
“That's what we're figuring through now,” he says, “just what the best approach to that content is. It's not an insignificant task to get that.”
But the technical issues are further along. Mackenzie says XM could beam video into vehicles with antennas no bigger than current units used for satellite radio reception. Satellite TV competitors, such as DirecTV, would have more difficulty accomplishing that feat, he says.
“Their system has a single satellite, and you need a big antenna to receive it,” Mackenzie says, alluding to the rooftop-size antennas now available in the aftermarket. “Ours has twin satellites, and it's really designed to get (the signal) to the car (efficiently).”
Sirius Satellite Radio, XM's biggest competitor, also has demonstrated streaming video and says it could introduce the technology in OE applications next year — possibly even sooner as an aftermarket item. Initially, Sirius and partner Delphi Corp. said the system would be available in 2005. Delphi now says the two will collaborate on their first OE application next year for an '08 model.
Both companies say there's considerable interest from OE partners in the potential of in-car satellite TV.
“There's this giant ‘wow’ factor,” says Paul C. Kirsch, vice president-OEM at XM. “(But) we haven't made any bold proclamations on when we're going to roll this out.”
Closer to in-vehicle reality is a new WeatherLink service, developed with WxWorx. XM already supplies detailed weather information for aviation and marine uses, and Mackenzie says the technology is installed on 80% of all new light aircraft manufactured. XM is looking to bring that to automotive cockpits within the next 12 months.
Drivers would get information on weather and road conditions delivered to their navigation system, which in turn could be used to re-route the vehicle, if necessary, around inclement conditions.
A similar feature is XM's ParkingLink, which sends real-time parking information to the vehicle. Drivers can click on a desired parking spot and let the navigation system guide them right to it.
The product, developed with Nu-Metrics Inc. and InfoGation, is made possible because many public garages and mall parking lots are monitored electronically, so the data is available.
“We're working with telematics organizations to aggregate all of that data and then be able to send it over the system,” Mackenzie says.
The product, which builds on XM's NavTraffic service (an additional $3.99 per month) that displays real time traffic information on the vehicle's navigation screen, is about 18 months from market, he says.
MarketLink and SportsLink would do the same for stock quotes and sports scores. XM already broadcasts this information, but the new service would offer the information in a graphic display.
XM's voice command system would bring much of this information to the driver on demand. Partnering with VoiceBox Technologies, a speech-recognition technology company based in Bellevue, WA, XM says it has developed a conversational voice-recognition system that will talk back to drivers to provide sports scores, stock market information and weather reports.
The information is streamed into the car and stored in databases, where “smart agents” can retrieve data at the request of the vehicle's occupants and deliver it in text-to-speech format.
“You're listening to a radio station and you say, ‘What song is this?’” Mackenzie explains. “The system will respond and tell you that information.”
XM is in a battle for both new subscribers and profits. While subscription revenue more than doubled last year to $503 million, net losses total $666.7 million, a further erosion from 2004, when red ink hit $642.4 million.
XM says it ended 2005 with more than 6 million subscribers, netting an additional 2.7 million. Of its current subscriber base, about half is automotive related.
Although sluggish GM car sales slowed growth on the OE side in the fourth quarter, XM says, its annual OE factory installations should reach 5 million units by 2008.
