Sunday, April 16, 2006

Want A Better OEM Take Rate?

April 16, 2006

This is a Satellite Standard Group (SSG) Opinion piece relating to the “Take Rate” (the number of people who keep satellite radio after the promotional period ends) of satellite radio in cars.

The factory installed satellite radio is getting more and more penetration into vehicle lines with each passing quarter. This seems great at first blush, but when you look a little deeper, you will find that the factory installed subscriptions simply are not as “sticky” as those subscribers that buy at retail.

The question is why?:

The Radios Are Not As Capable As The Plug and Play Version.

Factory installed radios typically are not as capable and lack the features that their retail cousins the 'plug and play' lines have. The OEM displays do not give the information in an easy to read format and the radios do not have the memory features that many of the plug and play radios do. With a plug and play you tell the radio your favorite songs and artists, and the radio will let you know when they are playing. With Plug and Play units, you can get data that scrolls the screen. Want sports scores or stock quotes? It is there on a plug and play, but you wont find it on OEM units.

Simply stated, the OEM radios still seem to be designed to cater to AM radio, FM radio, and CD’s. The manufacturers to date have not taken advantage of making OEM radios that accentuate the many facets of what satellite radio can deliver.

The Subscription Is Tied To The Car

Consumers who are paying for something typically want to have the ability to take it with them. A factory installed unit at this point is tethered to your vehicle. A potential solution would be to make an in dash docking unit similar to a plug and play that the consumer can remove and take with them. Another potential solution would be in a device similar to the Passport offered by XM Satellite Radio. The Passport is a chip embedded into a case that is about the size of a book of matches. A simple solution would be to simply have a slot in a factory receiver and allow the consumer to plug their “matchbook” into that slot. Other hand-held devices and home receivers could also have slots, thus allowing the consumer to take their satellite radio with them. In our opinion, the next solution is a slot that will accept a “chip” from either service.

Hopefully Sirius and XM are working towards improving the OEM experience. For many consumers, a factory installed satellite radio tied to a promotional subscription is their first experience with satellite radio. In our opinion, this is the chance for satellite radio to make a lasting first impression that can keep the consumer wanting more. Sirius and XM should make the most of this by getting hardware installed that sells the service better than the current offerings.

Satellite radio is all about content offerings, but the user interface also makes a lasting impression. A better OEM radio will translate directly into a better OEM Take Rate.

The link to this write up is http://tinyurl.com/nle6s

4/16/2006 11:20:00 AM

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