Sirius XM Radio Inc (NASDAQ:SIRI) has chosen its wireless carrier partner, teaming up with AT&T Inc. (NYSE:T) to provide the connectivity behind its telematics offering in new Nissan (OTCBB:NSANY) cars.
It’s been nearly a year since the satellite radio giant announced that it would be working with Nissan to offer more than premium audio in automobiles. General Motors Company (NYSE:GM) has been the market darling in this niche with OnStar, and you would be surprised at what drivers are willing to pay for emergency support, vehicle tracking, roadside assistance, and other infotainment goodies.
OnStar users pay $18.95 a month — more than a satellite radio subscription — for the basic OnStar plan, and that’s actually going up to $19.95 a month come October.
Sirius XM Radio Inc (NASDAQ:SIRI) and Nissan haven’t revealed their pricing plans, but you can be sure that it won’t be cheap after a free trial subscription.
Sirius XM couldn’t power the connections on its own, so it’s only natural that it chose one of the country’s two largest carriers in AT&T Inc. (NYSE:T) to partner with here.
The real question here is if pushing users to connected cars will benefit Sirius XM Radio Inc (NASDAQ:SIRI) in the long run.
For now, there hasn’t been any setback at Sirius XM Radio Inc (NASDAQ:SIRI). It’s been able to grow as streaming services explode in popularity, and earlier this year the company even admitted that buyers of connected cars are converting at a higher rate than drivers that don’t have smartphone interactions with their automobiles.
However, there always has to be this fear that the more connected that drivers get, the easier it will be to lose them.
“Your future car is going to be a smartphone with four wheels with powerful capabilities specifically built for a safe and enhanced customer experience,” AT&T Inc. (NYSE:T) executive Glenn Lurie is quoted as saying in yesterday’s press release. He goes on to heap praise on Sirius XM’s in-car experience, but widespread connectivity will bring more challenges than opportunities.
Sirius XM Radio Inc (NASDAQ:SIRI) has thrived in this climate of Bluetooth-connected smartphone owners — wrapping up its latest quarter with a hearty 715,000 net new subscribers — but it may not always be that way. In an apps-driven world, it’s not just about free audio entertainment alternatives. Even on the telematics end where Sirius XM is eyeing great things, free or nearly free solutions may eventually eat into OnStar and Sirius XM’s new offering.
Sirius XM Radio Inc (NASDAQ:SIRI) knows what it’s doing. It emphasizes the unique combination of satellite and cellular networks to do things that the competition can’t. That’s fine — for now — but it better know that AT&T Inc. (NYSE:T) is hoping to get something else entirely out of this relationship.
The article AT&T Is Sirius XM’s Friend and Foe originally appeared on Fool.com and is written by Rick Munarriz.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends General Motors.
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