Satellite Radio - In-car Entertainment

Satellite at the End of the Tunnel

In the hoo-ha about in-car entertainment systems (that sometimes cost as much as the car itself) are we forgetting a cheap, reliable and effective entertainment medium? Radio? Think ‘Satellite Radio’ and it will start to make some sense.

WorldSpace Satellite Radio set up shop in India a couple of years back. Their start was dull, and customer response was cold, to say the least. Since then, of course, they’ve pulled up their socks, understood the way the Indian market works, put their product/service package through a couple of price corrections. Bingo! WorldSpace is flying off the shelves. A basic receiver costs about Rs 1500, and subscription to the service is pegged at a reasonable Rs 135 per month – for a bouquet of 40 channels.

The catch is that WorldSpace in its current form can’t be used in your car. Even if you decide to carry the receiver around with you – not the best idea then, but for penny pinchers, everything goes. The problem is that the receiver needs to be in the ‘line-of-sight’ of one of three WorldSpace broadcast satellites up there in the sky. Which means that as the car moves, the antenna would need continuous reorientation to ‘see’ the satellites. Perhaps someone could design a little motor-driven system that would reorient the antenna as your car swooshes through the city. I am not sure that that is feasible, though.

The other alternative is to tweak the transmission-reception technology itself. Which is what XM Satellite Radio in the US has done. And that makes it very popular amongst the car-set (a younger kin of the jet-set)! No wonder then, that this year American Honda will now be bolting in XM Satellite Radios into over 650,000 Model 2007 Hondas.

American Honda and General Motors had pumped in funds into XM when it was just starting off. For good reason too. Today, Honda and GM own significant stakes in XM Satellite Radio (which itself was owned by WorldSpace till a few years back). That gives them access to XM’s latest technology as well as the option of blocking use of XM’s latest technology in competitor’s cars. Bear in mind that GM and Honda together sell command a market share of close to 38% of the US market. Moreover, XM is one of just two satellite radio service providers in the US. The numbers start to make some sense now (this has been my traditional ‘grey’ area).

The Satellite-Radio-Trend has just about started catching on here in India. WorldSpace is managing to keep its head above the water, while tweaking its strategies to penetrate the market more effectively. They have plans for an automobile receiver, which they say is under development. Our manufacturers would do well to look at pumping the spare cash they are sitting on WorldSpace Satellite Radio.

Manufacturers would want to assist WorldSpace with the R&D of the automobile receiver, bringing their own domain-specific know-how to the table. The benefits as I see them are manifold. Exclusive access to cutting-edge satellite technology, to start off with – manufacturers with a stake in WorldSpace could start off maintaining the exclusivity of the product/service bundle, turning it into a significant point of difference in a market that is turning hyper-competitive by the passing minute.

The second step in the evolution would be to make the receiver available (under license, perhaps) to other manufacturers as well. This would give WorldSpace the required numbers to drive down costs – the stakeholding manufacturers continue to source the receivers at a mighty discount, mind you.

Eventually, of course, prices (of the receiver, and more importantly, the service) will be driven down by volumes to a point where it will become feasible to let customers buy the receiver off the shelf (at their local Reliance Retail Megastore).

Effectively, this little differentiator will, in a few years after launch, turn into a feature that might become indispensable in an automobile – allow me a bout of conceited jargon-brandishing – a ‘Point-of-Parity’.

That would mean that the time is ripe for our original stakeholding heroes to roll out the next evolution of the satellite radio application – a satellite based navigation-cum-rescue system (which they had been developing with WorldSpace through these past few years). And then follow the same cycle with this one as well – maintain exclusivity, license to other manufacturers, drive costs down, sell it off-the-shelf. The possibilities, like the evolution, can be endless.

Satellite applications for cars are big money in the US and Europe (primarily radio and navigation-cum-rescue systems). India, like in most other aspects, holds immense potential for something of this nature. But like almost everything else that sells well in India, these applications have to be simple, elegant and most important of all, phenomenal value.

Those who have their finger on India’s pulse invariably make it big. Let’s see Indian manufacturers put their money where their finger is!

PS: One man who would know whether the Indian satellite industry’s evolution is at a stage where it can support the kind of explosive growth that is waiting to happen, is here.