ThirdNormalForm
March 19th, 2006, 11:30 AM
XM Satellite: From Handshake To Stores In Just Nine Months
The lesson: Partnerships are essential in the world of digital convergence,
where services are increasingly packaged with hardware
It's hard to imagine a rivalry more intense than that of XM Satellite Radio
Holdings (XMSR ) and Sirius Satellite Radio Inc. (SIRI ), the two satellite
radio upstarts. Sirius, of course, paid shock jock Howard Stern $500 million
to sign on. Both companies offer hardware discounts and free trials. And
both, via hookups with electronics outfits, are racing to be first out with
the latest gizmos.
In the white-hot world of digital convergence, where services are
increasingly packaged with hardware, partnerships are essential to being
first to market with the best blend of services and products. "From now on
this will be the normal way of doing business in consumer electronics,"
predicts Dan Murphy, senior vice-president for sales and marketing at XM.
He should know. XM's alliance with Samsung Electronics Co. to produce the
first portable satellite radio combined with a digital music player shows
how this sort of thing can be done. In April, XM and Samsung plan to release
their co-branded Helix, going from handshake to store shelves in just nine
months. That compares with the 12 to 18 months it typically takes to bring
new consumer electronics to market. Analysts praise the Helix effort. "You
look for markets that are already hot and bring them together," says Michael
P. Greeson, chief executive officer at tech consultant Diffusion Group Inc.
How did XM do it? A combination of foresight and a good eye for allies. The
journey started in early 2005, when the company spotted the opportunity to
meld satellite radio with a music player. Even before it found a hardware
partner, XM started designing the building blocks for the machine --
including chips, an antenna, and a tiny circuit board. Last May it
approached Samsung and discovered that the Korean electronics giant had
fixed on the same idea.
Once they signed a deal, the race was on to bring the new device to market.
The two companies created a virtual product-development team jointly headed
by one manager from each company. Samsung engineers focused on industrial
design and manufacturing, while XM focused on the antenna, the user
interface, and delivering one-of-a-kind features. Consumers will be able to
"bookmark" a song they're listening to on the radio and later buy it on the
Napster Inc. (NAPS ) Web site with just a few clicks of their computer
mouse.
This collaboration marks a sea change at Samsung. The company used to be a
go-it-alone outfit. No more. Now it's on the lookout for more partners. "We
have to find other companies that are leaders in their fields who can move
as quickly as we can," says Peter Weedfald, a senior vice-president at
Samsung Electronics America Inc.
Will XM and Samsung win this race? It has barely begun. But without
alliances to speed products to market, they'd have a hard time competing in
this new world.
The lesson: Partnerships are essential in the world of digital convergence,
where services are increasingly packaged with hardware
It's hard to imagine a rivalry more intense than that of XM Satellite Radio
Holdings (XMSR ) and Sirius Satellite Radio Inc. (SIRI ), the two satellite
radio upstarts. Sirius, of course, paid shock jock Howard Stern $500 million
to sign on. Both companies offer hardware discounts and free trials. And
both, via hookups with electronics outfits, are racing to be first out with
the latest gizmos.
In the white-hot world of digital convergence, where services are
increasingly packaged with hardware, partnerships are essential to being
first to market with the best blend of services and products. "From now on
this will be the normal way of doing business in consumer electronics,"
predicts Dan Murphy, senior vice-president for sales and marketing at XM.
He should know. XM's alliance with Samsung Electronics Co. to produce the
first portable satellite radio combined with a digital music player shows
how this sort of thing can be done. In April, XM and Samsung plan to release
their co-branded Helix, going from handshake to store shelves in just nine
months. That compares with the 12 to 18 months it typically takes to bring
new consumer electronics to market. Analysts praise the Helix effort. "You
look for markets that are already hot and bring them together," says Michael
P. Greeson, chief executive officer at tech consultant Diffusion Group Inc.
How did XM do it? A combination of foresight and a good eye for allies. The
journey started in early 2005, when the company spotted the opportunity to
meld satellite radio with a music player. Even before it found a hardware
partner, XM started designing the building blocks for the machine --
including chips, an antenna, and a tiny circuit board. Last May it
approached Samsung and discovered that the Korean electronics giant had
fixed on the same idea.
Once they signed a deal, the race was on to bring the new device to market.
The two companies created a virtual product-development team jointly headed
by one manager from each company. Samsung engineers focused on industrial
design and manufacturing, while XM focused on the antenna, the user
interface, and delivering one-of-a-kind features. Consumers will be able to
"bookmark" a song they're listening to on the radio and later buy it on the
Napster Inc. (NAPS ) Web site with just a few clicks of their computer
mouse.
This collaboration marks a sea change at Samsung. The company used to be a
go-it-alone outfit. No more. Now it's on the lookout for more partners. "We
have to find other companies that are leaders in their fields who can move
as quickly as we can," says Peter Weedfald, a senior vice-president at
Samsung Electronics America Inc.
Will XM and Samsung win this race? It has barely begun. But without
alliances to speed products to market, they'd have a hard time competing in
this new world.