The late-2001 launch of satellite digital audio radio (SDAR) service brought radio into the digital age.

Satellite-radio broadcasters Sirius Satellite Radio (www.sirius.com) and XM Satellite Radio (www.xmradio.com) focused initially on delivering coast-to-coast music, entertainment and information programming to motorists, but the companies have focused increasingly on the home and portable audio markets to deliver their diverse programming to people wherever they are.

As of early 2005, Sirius and XM beamed more than 120 and 130 programming channels, respectively, to compatible car radios, home radios, boomboxes and headphone-type personal stereos.

For motorists, a major satellite-radio advantage is the ability to enjoy uninterrupted music and information programming when traveling through multiple local-radio markets (which occurs during some peoples’ daily commute) or into areas with few or no listenable radio stations. Motorists enjoy digital-quality music without the multipath distortion and static that afflicts terrestrial analog radio stations.

More important, consumers on the road and at home get to enjoy the services’ cable-TV-like ability to deliver a diversity of content, which has grown to include a greater variety of sports programming, local traffic and weather information for select markets and radio personalities who are seeking refuge from AM and FM content restrictions enforced by the Federal Communications Commission (FCC).

Satellite’s advantages have proven so popular that the number of satellite-radio subscriptions broke the 1 million mark in late 2003, only a year and 10 months after satellite radio’s national launch. The adoption pace was second only to that of DVD players and far exceeded the speed with which consumer bought the first million radios, TVs, or VCRs, according to XM.

By the end of 2004, the satellite companies’ combined subscriber bases exceeded 4.41 million, up more than 180 percent from about 1.56 million at the beginning of the year. In 2013, Lehman Brothers market research projects a subscriber base of 40 million.

Measured in dollars, both services accounted for an estimated $520 million in retail-level sales in 2004, excluding sales by the automakers, XM estimates. For 2005, XM forecasts a near doubling of retail satellite-radio sales to more than $1 billion.

At the wholesale level, suppliers shipped 3.5 million tuners to retailers in 2004, according to CEA. In 2005, XM projects shipments rising to about 7 million. Wholesale dollar volume of tuners and related equipment rose 140 percent in 2004 to $300 million, XM added. (All figures exclude automaker sales.)

Content Diversity:
People who bought the tuners now enjoy commercial-free music programming that covers the spectrum of genres from country and folk to rap, hip hop and dance at a monthly subscription cost of $12.95. Each service also delivers many variations on a musical theme. There isn’t one country channel. There's new country, old country, alternative country and bluegrass. In 2004, Sirius launched an all-Elvis channel.

In 2004, the content of the services’ non-music channels grew more diverse as rivalry between the two carriers grew more intense. On these channels, which carry commercials, there is plenty of news, sports, weather and entertainment content, much of it provided by well-recognized content partners such as CNBC, MSNBC and Fox News. There are comedy channels, kid’s channels and conservative talk channels.

In 2004, Sirius launched an NFL channel to complement its live broadcasts of NHL, NBA and college basketball games. Also in 2004, XM began broadcasting college basketball and football games, complementing its NASCAR race coverage. In spring 2005, XM began broadcasting every Major League Baseball game.

For motorists, both satellite services began in 2004 to broadcast local traffic and weather reports to about 20 markets. Later in 2004, XM began offering XM NavTraffic service, which delivers traffic information – including accident locations – in real time to car navigation systems in those markets. The navigation systems display the location and nature of accidents and average traffic-flow speeds on maps that appear on video screens. The systems then suggest alternate routes to a driver’s planned destination. A predictive traffic service in the works from Sirius will combine weather reports, traffic data and historical information to suggest how long it will take to get to a destination. 

Satellite Surround Sound:

There’s a lot more that satellite radio broadcasters can do with their portion of the 2.3 GHz band. Early in 2004, for example, Sirius began broadcasting select songs on its classic rock channel in Dolby Pro Logic II surround sound, a stereo-compatible five-channel format that can be reproduced by home and car audio systems equipped with compatible surround decoders. Millions of home A/V receivers are so-equipped, as are a growing number of aftermarket and original-equipment (OEM) car stereo systems, according to Dolby Labs.

XM also delivers select programs in surround sound. Since 2002, live performances recorded by the company have been broadcast in a four-channel surround format compatible with existing home and car surround sound systems. The company is considering an upgrade to a discrete five-channel format that would require special decoders.

From Car to Home and Outdoors:
Initially, XM and Sirius focused on delivering satellite radio to passenger vehicles, but subscribers also have shown a strong interest in listening to satellite radio at home and outdoors.

The initial focus on the car stereo market was natural, given that there are about twice as many registered vehicles (at more than 200 million) in the U.S. as there are households, XM research shows. The satellite providers also believed their services would deliver substantially more value in moving vehicles than in homes because digital transmission eliminates multipath distortion and static, which are more likely to be heard in moving vehicles more than in stationary homes. The satellite companies also reasoned that commuters and long-distance drivers would appreciate the ability to listen to a single program while traveling through multiple local-radio markets.

On all counts, XM and Sirius were right, yet the diversity of their programming also caught fire in the home and office, the two companies contend. They base their opinion on where subscribers are using transportable (plug-and-play) tuners, which can be connected to existing home and car stereo systems when plugged into home and car docking stations. The tuners also can be snapped into boombox docking stations, which incorporate amplifiers, speakers and a rechargeable battery pack to reproduce programs outside the home and car.

Among Sirius subscribers who bought a bundled plug-and-play tuner and a car-stereo docking station in 2004, about two-thirds also bought home or boombox docking stations. XM contends 90 percent of its car-dock buyers have purchased home or boombox docking stations. 

Product Diversity:

Like the programming they reproduce, satellite radio products are diverse. In early 2003, at least 13 consumer electronics brands were offering satellite radio products, and in 2004, that number grew to almost two dozen, largely through the launch of more dedicated home tuners and so-called plug-and-play systems. In 2005, nearly 40 consumer electronics companies are competing in the home, portable and car satellite-radio markets.

The automakers also are doing their part. In the 2005 model year, according to market research company In-Stat/MDR, more than 150 passenger-vehicle models offered satellite radio, mostly as optional equipment.

Home, Outdoor Options:
Because potential subscribers aren’t always stuck in traffic inside their car, satellite companies began in 2004 to aggressively expand the selection of products that extend the satellite-radio experience to the home and outdoors.

Dedicated home tuners appeared for the first time in 2003 from only three suppliers, but in 2005, at least 15 companies planned to offer dedicated home products. These devices deliver high-performance through a home stereo system, and many of them are so-called multi-zone tuners capable of distributing two or more satellite channels simultaneously to different rooms of a house. Multi-zone tuners are designed to be integrated with custom-installed distributed audio systems, which reproduce music through in-wall and in-ceiling speakers scattered throughout a house. In 2005, prices of dedicated home tuners start at less than $300 but range up to $10,000 for a sophisticated surround sound A/V receiver that distributes music to multiple rooms of a house.

In 2005, dedicated home tuners were expected to proliferate with the launch of the industry’s first satellite-ready A/V receivers, HTiB systems and other home entertainment gear, which could include DVD players, stereo music systems, tabletop radios and boomboxes priced as low as $100. These devices control outboard XM tuners that are so small that they’re built right into a standard-size home XM antenna. All you have to do is buy the $50 antenna/tuner and plug it into an XM connector on the home audio device, which displays satellite-radio program information, including song title and artist name. In early 2005, 13 suppliers said they planned to offer XM-ready home audio and boombox products in 2005 or 2006.

For people who like the outdoors, at least seven brands in 2004 offered satellite-radio boomboxes that accept plug-and-play tuners. Also in 2004, the first integrated boombox with a built-in satellite tuner went on sale at $169 -$199.

Headphone Stereos: