Study: HD Radio, Portables Could Dampen Automakers’ Satellite Jones

Will HD Radio dampen automakers’ love affair with satellite radio?
Car OEMs may cool a bit on satellite radio as the satcasters add more portables to their lineups and HD Radio becomes a factor in cars, according to a survey from New Strategy Analytics research. Because of those factors, automotive OEMs should be cautious about introducing satellite digital radio options, despite increasing adoption of satellite digital radio in the U.S., the company stated.
Strategy Analytics predicts the market for in-vehicle satellite digital radio in North America will increase from 5.2 million units in 2004 to 12.8 million by 2011, in terms of OEM and aftermarket shipments. XM and Sirius reported a combined total of 6.2 million subscribers at midyear.
Satellite radio growth won’t automatically translate into the auto market, says Analytics, and growth in general will slow down toward the end of this year. In-vehicle satellite radio will face competition from portable satellite radio devices and HD Radio.
Heavy marketing for satellite radio for those car buyers who were given either initial free subscriptions or a reduced price won’t necessarily translate into 100 percent auto adoption, Analytics believes.
“XM and Sirius face competition from Ibiquity’s HD Radio. However, Ibiquity now needs to shift focus from radio station upgrades to consumer system upgrades,” stated 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.”