December 15, 2004

LOS ANGELES (Reuters) - After grabbing the spotlight by signing shock jock
Howard Stern and launching a palm-sized portable device, hopes are high for
satellite radio companies, which are expected to show off navigational,
video and recording capabilities next month.

XM Satellite Radio Holdings (Research) and rival Sirius Satellite Radio Inc.
(Research) have amassed nearly 4 million subscribers collectively.
Expectations for growth are high, with Sirius stock up by triple digits
since it nabbed Stern and hired radio veteran Mel Karmazin as its CEO.

Rumors that Sirius and Apple Computer Inc. (Research) were going to announce
next month at the Consumer Electronics Show or MacWorld a deal to bundle
iPods with satellite radio have added to the sector's buzz.

Sirius and Apple declined comment on the rumors, but analysts said it seemed
technologically unfeasible right now.

"I don't believe Sirius' chip set is at the point where it can go into an
iPod. It's the size of a credit card, and an iPod would need a chip set the
size of a thumb nail," said April Horace, a Janco Partners analyst.

That's not to say the industry is not thinking about it. After launching its
wearable MyFi device in October, XM chief executive Hugh Panero said he
believed one day a portable satellite player would be combined with a device
like an iPod.

"We've had on-and-off conversations with people in hardware and software
over the years," he said.

Sirius chairman Joseph Clayton has said over the past several months that
when Sirius has its third generation chip set ready, expected by as early as
late summer, it will enable Sirius to make a device similar to the MyFi.

At the consumer electronics show, XM will demonstrate products like the MyFi
and its SKYFi2 plug-and-play radio, the first satellite radio with pause and
replay features.
Industry sources expect Sirius to showcase new recording capabilities for
existing products.

"Consumers want to take their music experience and flow with them. That's
why recording capability and storage capability will be huge in the vehicle
and in the home and wherever you go," said Clayton last week in New York.

Traffic navigation will also be a big topic. Sirius has just announced it
will offer updated traffic data that can be integrated into car navigation
systems, combining route guidance and mapping.

XM offers a traffic service with Honda Motor Co Ltd. that feeds XM's
real-time traffic information into the map on a car's navigation system.

Both XM and Sirius demonstrated video capabilities last year and will do so
again this year, but video via satellite radio is still evolving. XM has
said it is waiting to see if there is a sound business model and demand.

In addition to more car radio announcements, PCMag.com editor Jim Lauderback
expects more third party gadget makers to jump in on the satellite radio
bandwagon.
"We'll see consumer electronics vendors like Pioneer and Sanyo showing more
satellite products as they become more popular and less expensive," he said.

Meanwhile, traditional broadcasters Clear Channel Communications Inc.
(Research) and Cox Radio Inc. (Research) are expected to unveil accelerated
plans to roll out digital AM/FM radio.

(CNN)