1 More Connected Car Threat for Sirius XM
General Motors is about to throw some serious weight behind the connected car revolution, and Ma Bell is calling shotgun. Starting with the 2015 Chevy Malibu that hits showrooms next month, GM will offer 4G LTE connectivity in 30 different Chevy, Buick, Cadillac, and GMC vehicles.
GM is partnering with AT&T for the connectivity that was originally announced 15 months ago at the Mobile World Congress. Cars with mobile hotspots have often come with stiff pricing plans, but that won't be the case here as a result of AT&T's Mobile Share data plan. Just $10 a month will allow an AT&T customer on a Mobile Share plan to add the in-car router to the devices that can access the pool of data.
This is a pretty big deal. GM will make sure that connected cars become more prolific with the wide rollout. AT&T will make sure that these hotspots get connected with economical plans for drivers that already have ample data to spare every month.
One company that isn't going to like this is Sirius XM Radio . The satellite radio provider hasn't shied away from the inevitability of cars with wireless connectivity. In fact, Sirius XM has embraced the trend. Last year, it was CFO David Frear pointing out how its retention rate for buyers of connected cars is holding up just as well as, if not better than, the rate for drivers of cars without mobile access.
He dismissed the threat of the GM alliance with AT&T at the time, telling conference attendees that most GM drivers aren't on AT&T. It wasn't much of an argument, but it's true. Drivers will have to pay between $30 and $50 a month for connectivity if they're not existing AT&T subscribers.
It's not as if Sirius XM has been asleep at the wheel. It's been beefing up its online offerings with on-demand programming and personalized radio. Sirius XM sees its satellite receivers as a way to enhance Web-served audio entertainment -- and the other way around.
Sirius XM has survived the threat so far. Despite the growing number of drivers in connected cars through in-car routers, mobile hotspots, or Bluetooth-tethered smartphones, it closed out the March quarter with a record 25.8 million subscribers. This will still be a challenge. GM hopes that its reasonably priced AT&T 4G LTE plans will help differentiate its vehicles from the competition, and it will likely invest in marketing that advantage as soon as next month.
The connected car revolution is about to put the pedal to the metal. Sirius XM will need to make sure that it can keep up.
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The article 1 More Connected Car Threat for Sirius XM originally appeared on Fool.com.Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends General Motors and 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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