Fighting off fierce completion from iPods and other portable entertainment devices, the US digital satellite radio market will surge from its current installed base of 12 million units to 55 million units in 2010, analysts predicted today.
According to the latest Jupiter Research report, the sector is poised to enjoy a compound annual growth rate of 35 per cent.
"Transportable devices will lead the installed base mix with sales being driven by wide device selection and lower price points. However, in-vehicle interest has been strong," said Michael Gartenberg, vice president and research director at Jupiter Research.
"Twenty-three per cent of online consumers we surveyed demonstrated a strong interest in the service, but overall only six per cent of online consumers have satellite radio."
Two thirds of sales in 2005 will be transportable devices comprising both plug & play and handheld units. This trend will continue though to 2010, which will see 60 per cent of sales coming from transportable devices. In-car device sales will grow from 2.5 million units sold in 2005 to 6.9 million units in 2010.
The Jupiter Research report found that existing satellite radio firms XM Satellite and Sirius need to move beyond the car and integrate satellite radio into other devices in order to spur growth.
The report pointed out that the mobile phone presents a lucrative opportunity, not for integrating the satellite receiver but for taking advantage of fast wireless networks to offer existing internet streaming services to current and new customers.
"The signing of big deals such as Howard Stern and Major League Baseball has raised the stakes for XM Satellite and Sirius, even beyond the initial capital outlays for satellites and subsidised hardware," noted David Schatsky, senior vice president of research at Jupiter Research.
"The primary challenges for Sirius and XM are price and competition with other portable media players and music services, such as iPods and iTunes respectively."
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