Is Apple's New Toy a Sirius XM or Pandora Killer?
Apple is hoping to make its iOS products more attractive to drivers, and that could be bad news for Pandora and Sirius XM Radio .
The consumer tech giant introduced CarPlay this morning. The platform makes it easier for drivers to engage with their iPhones without having to take their eyes off the road. They can make phone calls, check voice mails, and pull up directions by simply pressing a steering wheel button and calling up Apple's voice-recognizing Siri. It will be available this week for Mercedes-Benz, Volvo, and Ferrari drivers, but more than a dozen other car giants are already on board to roll it out soon.
How does this potentially trip up Pandora or Sirius XM? Well, naturally, CarPlay also makes it seamlessly easy to use an iPhone's flash memory or mobile connection for audio entertainment on the open road.
"CarPlay gives drivers access to all of their music, podcasts, audiobooks and iTunes Radio with easy navigation through listening choices from the car's built-in controls or simply by asking Siri to pull up what you'd like to hear," Apple's press release explains. "CarPlay also supports select third-party audio apps including Spotify and iHeartRadio, so you can listen to your favorite radio services or sports broadcast apps while driving."
Pandora is surprisingly missing from the list of apps named. As the niche leader that served up 1.58 billion hours of content in January to its 73.4 million unique listeners shouldn't it be the first of "select" third-party audio apps mentioned? In the end, it's clear that Apple's game here is to push its Pandora rival iTunes Radio on to more drivers.
Sirius XM also can't ignore CarPlay. It's in the car, and that's where the satellite radio monopoly is primarily used by most subscribers. Apple also makes it a point to emphasize the ability to stream podcasts, audiobooks, and sports broadcast apps. In other words, it's not just a music play. CarPlay wants to turn your iPhone into your radio and that could weigh on Sirius XM as well as terrestrial radio. As great as Sirius XM is, it has increased its rates twice over the past three years despite programming costs per subscriber declining in that time. It may be susceptible to free or nearly free entertainment options that are just as easy to experience.
Now it's important to be realistic. Many auto manufacturers already have adequate, if not superior, in-car technologies in place that allow drivers to engage with their smartphone apps through their dashboards. Some brands have had this for several years, and both Pandora and Sirius XM continue to grow their audiences.
It also bears pointing out that CarPlay is limited to the iPhone, unlike broader connection platforms that cover more mobile operating systems including the market-leading Android. It will be more crowded with companies trying to get you connected, but until Pandora usage starts to dip or Sirius XM's self-pay subscribers start to slide, it's not worth getting worked up about CarPlay.
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The article Is Apple's New Toy a Sirius XM or Pandora Killer? originally appeared on Fool.com.Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Pandora Media. It also owns shares of Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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