The iPod Satellite Rumor.

By Richard Menta 12/02/04

As the iPod charges triumphantly into the holiday season thoughts are already turning to what the next generation of Apple players will hold. The grapevine has been circulating for weeks the notion that a flash memory iPod will be announced during Steve Jobs keynote at Macworld on January 11. Now the rumor mill is suggesting another unit will be unveiled that day.

Rumors are circulating that Apple has signed a deal with one of the satellite radio companies, Sirius, to market iPods that can receive and record that company's satellite broadcasts. I can't say if there is any validity to this latest bit of gossip - it is probably nothing more than someone's clever imagination - but since Think Secret's accurate scoop the other month on the iPod Photo one hesitates to dismiss it too quickly.

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Think Secret obviously had an insider leak them the iPod Photo information as the specs they quoted were almost word-for-word from the press release Apple released weeks later. On a business level I was not that impressed by the iPod Photo as a concept because the cameras that take the digital pictures the iPod displays are already portable and themselves can display photographs to family and friends.

An iPod Satellite, on the other hand, offers several elements that make it compelling as a product for both consumers and manufacturer. That is what interests me most about such a player - more so than an iPod GPS or even an iPod Phone - because here there is another form of paid content to deliver to users. Frankly, its a partnership that makes good business sense.

The Business Angle

From Apple's point of view an iPod Satellite would certainly offer a unique high end feature that would trump the FM radios found in a number of competing units. Some pundits have been listing XM and Delphi's latest MyFi portable satellite radio as an iPod competitor, but it is not an MP3 player. The iPod could be the first to converge both technologies.

Second, Apple would no doubt get a piece of Sirius' monthly service charge, which would provide the iPod line with an additional (and recurring) revenue source. That's something Wall Street likes to hear and would drive their recent love affair with Apple's stock to levels of absolute giddiness.

Third, it provides the iPod line with a new high-end player, one that would nicely balance out the low-end pricing an iPod Flash would offer, if it too is more than just a rumor. The iPod Flash/Satellite combo would present a nice one-two punch to market competitors.

As for Sirius, it would gain considerably from such a relationship too. The company is a distant number two to XM in total paying customers, but the satellite radio market is still young and the company is aggressively looking to grow.

A recent deal will put their radios in all 2005 Mercedes. As for content, the company signed a huge deal to woo Howard Stern away from terrestrial radio starting in 2006. Apple offers another strong partner for growth.

Putting their service in an iPod can not only grow market share quickly, it - if Forbes is correct about the "iPod Halo Effect" - can also give Sirius greater market visibility and cache'.

The iPod also offers a player that can command a higher price tag, something that may be needed to profitably pull off a satellite/MP3/ACC/name your favorite codec portable.

Is it Real?

All this sounds nice, but that doesn't mean any of it is true. As Apple is always tight-lipped on new products prior to their announcement, any effort to get them to confirm such a player is only an act of futility. Likewise, the Sirius PR folk will be sworn to secrecy.

Maybe the folks at Think Secret or AppleInsider are already tapping into their iPod moles for confirmation. Likewise for Thomas Weisel analyst Jason Pflaum who is on the record supporting the iPod Flash rumors.

No guarantees these sources will produce anything. Our own story on the iPod Video rumors also gave compelling reasons for such a unit, but a over a year later one is yet to appear (though at least a dozen competing manufacturers have since released or announced hard drive-based portable Video/Digital Music players).

So will there be an iPod Flash and an iPod Satellite next year? You'll have to wait until January 11th to find out.

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Other MP3 stories:
iPod Killers for Christmas Part I
iPod Killers for Christmas Part II
iPod Killers for Christmas Part III
iPod Killers for Christmas Part IV

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