XM FINDS EARLY, PLEASANT SATELLITE RADIO SURPRISES
Launch of XM Satellite Radio has been full of surprises, Chmn. Gary Parsons told Solomon Smith Barney conference in Scottsdale Thurs. Company had expected subscribers to skew strongly toward men 18-34, core of the car stereo market. Instead, early buyers have come almost evenly from those aged 18-55, Parsons said. He attributed that to drawing power of XM’s several channels each of jazz, classical music, news. Older purchasers are helping make add-on hardware more popular than in-dash units because they aren’t inclined to rip existing music systems out of their cars, Parsons said.
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Further, early subscribers are running 85% metro residents, contrary to projected 50-50 urban-rural split based on fewer terrestrial choices in sparser regions. However, that’s function of greater availability of receivers in metro areas because of buying clout of big chains such as Best Buy and Circuit City, Parsons said. XM is pushing to get hardware to independent stores, which he said would shift customer base more toward hinterlands.
Where Sony had expected 10% of purchasers of its plug- and-play receiver to buy adapters to plug units into home stereos, more than 40% were doing so, Parsons said. He said that demonstrated potential home and office audience much larger than anticipated. Also, many people are attaching XM receivers to PCs rather than stereos, he said. Alpine and Sony are planning to bring out new hardware in 2nd quarter to fill out their product lines. Other upcoming products include small chip box attached to cable that will allow Pioneer satellite receivers to plug into CD players on cars less than 8 years old, and adapter that will allow Kenwood receiver made for rival Sirius satellite service to work with XM, Parsons said.
Satisfaction levels run high among consumers as well as retailers, Parsons said. Greystone Communications collected “excellent” ratings from 92% of surveyed subscribers for sound quality and 94% for the service overall; 99% said $10 per month service offered good or excellent value. “There was no negative or even mixed reaction,” Parsons said. Separate Yankee Group survey of executives of companies with 1/3 of U.S. CE sales also responded favorably, he said. “What I'm telling investors is, ‘Do not buy the stock until you buy the product… $300 due diligence [for a receiver] is all you need.”