However, Pandora is not a direct competitor of Sirius XM. They operate very differently. Sirius is an ads-free internet music that requires monthly subscription. Pandora Media Inc (NYSE:P), on the other hand, is an ads-based internet channel that broadcast music with advertisements. Unlike Sirius that earns from subscriptions, majority of Pandora’s revenue comes from ads. Nonetheless, both products compete for online music entertainment, making Sirius XM and Pandora competitors to each other.
Sirius has already secured partnership with several car audio products. This includes popular brands like Alpine, JVC, Kenwood, Eclipse, Clarion, and Pioneer, among others. It has partnered with several popular and automotive manufacturers, as well. Among them are Ford, BMW, Audi, Mercedes Benz, Porsche, Volvo, Volkswagen, Nissan, Lexus, and Toyota. These partnerships guarantee steady streams of income for the company.
Potential Threats: Google and Apple
Pandora is just one piece of the competition landscape. Sirius could be in serious trouble against the tech giants Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL). Google Inc (NASDAQ:GOOG) announced the launch of Google Play Music All Access on May 15. Just like Sirius, this is a subscription-base service that provides on-demand ads-free internet live music streaming.
There are two major concerns for Sirius regarding the Google Inc (NASDAQ:GOOG) All Access service. First, the monthly subscription rate of Google is notably lower than the rates of Sirius. Google All Access is offered for only $9.99 per month with one month free trial.
The monthly subscription rates of Sirius, on the other hand, start from $14.49 to $17.99 per month. The annual plan is offered at $199 per year. However, Sirius has a lot of perks to offer. This includes access to premium programs like NBA games, NHL games, PGA tours, and Oprah Radio, to name a few. It further offers exclusive entertainment like Blue Collar Radio, and Comedy Central Radio. So, the specific target market segments are different.
Another major concern is the huge user base of Google Inc (NASDAQ:GOOG), which Google can quickly tap on for its All Access service. This can quickly grab a significant piece of the market share. While many see Spotify to be largely affected, Sirius can be affected as well.
Apple Inc. (NASDAQ:AAPL) is set to launch another similar service. Up to now, no one has an idea on the business model of Apple Inc. (NASDAQ:AAPL)’s internet music. It might be something similar to what is offered by Pandora. But one thing for sure, it will stir the online music entertainment market.
Final Notes
Despite the growing threats from competitors, Sirius XM remains upbeat. Its growing subscriber base is the major catalyst for the rally. While the competition in online radio becomes tough, Sirius XM distinguished itself as a satellite radio. However, the real threat could be an agreement between telecommunication service providers and online music providers.
Nur Tarkak has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Nur is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Rising Competition Cannot Stop This Company originally appeared on Fool.com is written by Nur Tarkak.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
