Sirius XM is already in most new cars, but if Pandora is already in one-third of new cars, then we cannot help but wonder if its media player integration will be in half of the cars in 2014. If so, then Sirius XM’s latest growth rates may have more competition ahead.
Another surprise was that the launch from Apple Inc. (NASDAQ: AAPL) into an expanded music service sure looks as though it is not going to be a huge financial threat to Pandora. Tim Cook could have crushed Pandora if he wanted to, but the model and roll-out just does not look like a systematic threat because the move was still an Apple ecosystem move rather than expanding outside its own platform.
Pandora said that its online radio service has been integrated into the dashboard of more than 100 new vehicle models. It also claimed to have more than 2.5 million unique activations. That is far less than the Sirius integration, but everything has to start from somewhere. Pandora represents that it has 23 major automotive brands and eight after-market manufacturers as its partners.
The issue that has been problematic is that Pandora’s expenses have risen as fast or faster than its sales. The company is pushing for lower royalties, even by pursuing legislation. The company will have to rely on ad revenues catching up, and that is very different from the subscriber-only model of Sirius XM and Apple.
Main Street listeners like the news enough that Wall Street is cheering too. Shares are up 7.7% at $16.30 in late-morning trading on Tuesday, against a 52-week range of $7.08 to $19.37.
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