Industrial Organizational Strategy Option for SiriusXM Radio 2

Industrial Organizational Strategy Option 2: Target the Mobile Consumer Market with Handheld Devices

Far and away the greatest threat to SiriusXM’s paying subscriber base is the emergence of free listening services that are available on the go. Examples of these include Pandora, La Vella, and AOL Radio, to name just a few. While each of these services offers music, sports, and talk show content, negative aspects of their offering include advertisements and limited sources for content. To understand this better, consider the role of Howard Stern. Stern’s enormous fan base is only able to listen to his commentary on the SiriusXM network, a service which to many is worth paying for. For consumers with less discerning palates, however, the free services often suffice. This threat gets worse as Pandora will soon be available to people in their cars.

The market for mobile consumer audio devices, including iPods and Zunes, is almost entirely saturated at this point in time. The fact that breaking into this market and gaining a foothold is nearly impossible and surely unrealistic immediately undermines the notion that SiriusXM should consider releasing its own line of mobile handheld devices. For the time being, SiriusXM’s customers listen to the company’s service from their homes and automobiles. With the exception of an occasional device which has portability options, SiriusXM has not yet targeted the mobile consumer market. If the company could package a satellite radio in a design that is both user-friendly and affordable, then consumers who listen to music on the go might consider SiriusXM’s service. SiriusXM claims to offer superior quality and quantity of content with 250 CD-quality channels, which is the main reason that busybody consumers would consider changing the brand of listening device they patronize.

The research and development cost to produce and market devices of this nature, combined with Apple, Inc’s stronghold on the portable listening device market, effectively eliminates the possibility of SiriusXM pursuing this strategy successfully. Because no other portable device maker would be offering satellite technology in their devices, and because buyer criterion for said devices is varied, SiriusXM would be switching business level strategies to broad differentiation if it chose to pursue this line of attack.

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