IPods in cars raise questions for satellite radio!

[Dashken]

LOS ANGELES (Reuters) - Apple Computer (Nasdaq:AAPL - news) on Wednesday outlined plans to expand its iPod music players into cars, raising some concerns that the dominant digital music company could sap growing demand for satellite radio.

Apple, which previously joined forces with BMW, said it has teamed with Acura, Audi (NSUG.DE), Honda Motor Co.(7267.T) and Volkswagen (VOWG.DE) to integrate iPod products into their car stereos for 2006 model lines.

Apple expects more than 5 million vehicles will ship with iPod support in the United States in 2006.

The automotive industry is deemed fertile ground for the booming consumer electronics market.

Some analysts estimate that by 2011, the market for in-vehicle entertainment systems will be worth $56 billion across North America, Europe and Japan.

One of the chief beneficiaries of that trend has been satellite radio, and analysts were divided over whether Apple and the upscale radio companies would fight for consumer dollars or peacefully coexist.

No. 1 satellite provider XM Satellite Radio Holdings Inc. (Nasdaq:XMSR - news) said there was no threat.

"These are two very different offerings, both of which have been embraced by millions of consumers," said Chance Patterson, a spokesman XM, which is available in GM, Honda, Toyota, Hyundai, Nissan, and Volkswagen/Audi automobiles.

About half of XM's 4.4 million subscribers are from car-based systems.

"XM is unique because we have hundreds of programmers delivering millions of songs plus live news, live sports and talk directly to subscribers," Patterson said.

XM rival Sirius Satellite Radio Inc (Nasdaq:SIRI - news) declined to comment.

Drivers have already been listening to iPods in cars, chiefly using tiny transmitters that plug into iPod earphone jacks and broadcast songs to the car FM radio, at lower quality than heard over an iPod itself, said American Technology Research analyst Shaw Wu.

Some cars have a line-in port, like a home stereo, that can take an iPod input.

Apple laid out plans that would allow users to more easily control their iPods. Kits, estimated to cost anywhere from $150 to $400, would require professional installation and connect iPods through docking ports in cars, Wu said.

PRICE IS KEY

Price may be the key to the potential battle.

"If the iPod feature is cheaper and allows you to download music you already own, some car buyers might decide they're not going to take satellite radio," said Gordon Wangers, chief executive officer of AMCI, a Marina Del Rey, California-based auto marketing consulting company.

But others said it was hard to tell which product was priced lower. "At this point, which function is cheaper is unclear. When GM offers XM, it's included in an audio package, with 6 speakers and a CD changer. In other cases, you might see it offered in cars for $300 or less," said April Horace, an analyst with Hoefer Arnett.

"It could be a slight threat to satellite radio but I would expect they'll coexist," said Kit Spring, an analyst with Stifel Nicolaus and Co, noting that listening to a radio is a more passive activity than using an iPod and that radio has live content.

Source: http://news.yahoo.com/s/nm/20050908/tc_nm/apple_cars_dc