Case | HBS Case Collection | March 2002 (Revised November 2003)

Satellite Radio

by Thomas R. Eisenmann and Alastair Brown

Abstract

In early 2002, XM and Sirius were fighting for control of the emerging U.S. market for satellite radio. Each company targeted consumers in automobiles, providing 100 channels of CD-quality audio for a monthly subscription fee of $10-$13. Wall Street analysts predicted that these companies would be profitable by 2005-2006, but investors were increasingly skeptical of ventures that required huge, irrevocable bets on customer acquisition and infrastructure. This case describes the business models of the satellite radio companies, the technology they employed, and their target markets. Poses questions about their pricing strategies, strategic partnerships with auto manufacturers, and whether they should develop interoperable radios that receive either company's signals.

Keywords: Growth and Development Strategy; Price; Risk and Uncertainty; Problems and Challenges; Network Effects; Partners and Partnerships; Technology; Business Model; Investment Return; Auto Industry; Media and Broadcasting Industry; United States;

Citation:

Eisenmann, Thomas R., and Alastair Brown. "Satellite Radio." Harvard Business School Case 802-175, March 2002. (Revised November 2003.)