Digital Satellite Radio
Prepare for a dog fight in the skies. Sirius, until recently the also-ran of the two competing satellite radio systems, started barking like it was going to bite at its CES press conference this morning. The new vigor came from recently appointed CEO Joe Clayton, formerly of RCA, who introduced a new management team and new strategies. The consumer-electronics equivalent of a fire-and-brimstone preacher, Clayton made five main claims in comparing Sirius with its rival, XM -- whose service is already up and running.

• 60 channels of completely commercial-free music (vs. XM's 37 channels without ads).
• No recycled radio broadcasts; programming would include the latest hits all the time on Top Hit channels and 40 channels of variety including Court TV and reality programming.
• Superior sound using statistical multiplexing, the same system used by DirecTV.
• Ergonomically superior interface, making it easier to operate.
• Superior customer service.

DOG STAR: Sirius Satellite Radio CEO Joe Clayton is upstaged by the company's canine mascot, Sirius (what else?).

Sirius will roll out its service gradually starting February 14, adding a few cities at a time until it blankets the entire contiguous U.S. in July. It will experiment with different subscription packages and incentives, ranging from rebates to three months free with a one-year subscription. Monthly fees will vary between $9.71 in some markets with the yearly subscription incentive to $12.95 in other markets. Sirius offers free auditioning of its programming on its Web site, siriusradio.com. Clayton doesn't see it as a problem that Sirius is six months behind XM -- he cited EchoStar's Dish Network, which started later but overtook DirecTV, and noted that satellite radio is still at the beginning of its growth curve.

Clayton, accustomed to working with the dual canine mascots at RCA, introduced a West Highland terrier as the Sirius mascot, since the satellite system is named after the dog star. Sirius, the dog, barked loudly.

Three hours later, XM held forth with videos of enthusiastic press, dealer, and consumer endorsements. According to independent research, XM's 30,000 paying subscribers in less than two months places it far ahead of CD and DVD as the fastest-selling new audio product in 20 years. XM uniformly prices its service at $9.99 per month. Although their music programming differs, Sirius and XM offer many of the same news, talk, and sports channels, none of which are commercial-free. Both will also use NASCAR as a promotional vehicle. XM president Hugh Panero coined the term "car potato" to describe satellite radio listeners, saying that many people look for excuses to drive around or even sit in their cars parked in their driveways to listen to XM. XM also offers samples on its Web site, xmradio.com.

--Rich Warren

Coming Up
The official Day One of CES (January 8) promises announcements by Dolby Labs and DirecTV as well as news on Super Audio CD. Catch us here tomorrow!