Sirius is teaming with Microsoft to offer more in-car entertainment.

Stephen Lawson, IDG News Service

Thursday, January 06, 2005

Sirius Satellite Radio plans to offer video content in addition to its more than 120 audio channels in the second half of 2006, the company announced this week at the International Consumer Electronics Show in Las Vegas.

The company, chief rival to XM Satellite Radio Holdings in the U.S. market, has joined with Microsoft to use Microsoft Windows Media Video 9 software and collaborate in developing the service. Sirius develops and delivers a service from satellites and works with car makers and auto electronics manufacturers to provide equipment to pick up the service.

Similar Deal

This isn`t the first time Sirius has made a partnership announcement for an in-car video service at CES. At last year`s show, the company said it would work with auto electronics maker Delphi to deliver live in-car video and make the service available to car manufacturers within 18 months--by mid-2005.

Delivery to auto makers comes before a service is available to consumers, says Sirius spokesperson Ron Rodrigues. He declined to comment on whether that would happen by the middle of this year.

Delphi is still actively working with Sirius on in-car video, according to Delphi spokesperson John Shea. Shea would not comment on when such a service might be available. Rodrigues, at Sirius, declined to comment on whether the company is currently working with Delphi.

Sirius is offering few details about the video service but says it should include two to three channels of video designed primarily for children. It is intended for new 2007-model cars with more advanced future antennas, but the antennas should be about the same size as current ones for Sirius radio, Rodrigues says. Other manufacturers might offer aftermarket add-on systems for existing cars in the future, he adds.

In developing the video service with Microsoft, Sirius is responding to the demands of car makers, Rodrigues says.

In-Car Video Downloads

Also this week, Delphi began blazing another path to in-car video, announcing a deal with Comcast to develop a system for downloading video from the cable operator onto a hard drive in the car. After capturing cartoons, sports shows, movies, and other video over a Wi-Fi network, Comcast subscribers could watch those shows on the road, Delphi`s Shea says. Evaluation and development will take 6 to 18 months, he says. Pricing for the equipment and service have not been set.

Meanwhile, a current provider of vehicle-based satellite video receiving systems, RaySat, announced a new system that will add in high-speed satellite Internet access that passengers can use via a Wi-Fi transceiver. The SpeedRay 3000 can deliver as much as 2 megabits per second of satellite throughput even in isolated areas, the company says in a statement. It uses a five-inch-high dish antenna housed in an impact-resistant case on the roof. The antenna will ship in the third quarter for $3495. RaySat did not disclose TV and Internet subscription rates.

Evolving current in-vehicle video systems like RaySat`s into a service more like satellite radio could expand the market, says Michelle Abraham, an analyst at In-Stat/MDR, in Scottsdale, Arizona.

``If you can use a similar-sized antenna [to satellite radio] and it`s not going to be that much more expensive, then you`re going to have a lot more consumer interest,`` she says.

Are Consumers Ready?

However, Sirius may be jumping the gun, according to Thilo Koslowski, an automotive analyst with Gartner.

``I`m not convinced they can pull it off at this time, and I`m not sure consumers want it now,`` Koslowski says. Both Sirius and XM need to concentrate now on drawing more subscribers to reach profitability, and video would appeal only to a subset of drivers who frequently have passengers in the car, he says. Even those consumers may prefer to buy their own DVDs and use an in-car player.

In addition, Sirius is a newcomer at getting the movies and other content that subscribers would want to watch. ``I`m not quite sure yet that Sirius can compete with DirecTV or a cable provider when it comes to programming,`` he says.

To succeed down the road, both satellite and hard drive-based video systems will have to be able to leave the car, Koslowski says. Rather than built-in systems, both Sirius and Delphi will probably need portable devices--and Apple Computer`s IPod may get there first, he says. Auto manufacturers themselves have become cautious about new built-in electronics, he adds.

``Going forward, the vehicle manufacturers will only offer an interface in their vehicle . . . that will connect to devices that you bring into the vehicle,`` Koslowski says.