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TheStreet Open House

Sirius XM Is Not Alone Anymore

Stocks in this article: SIRI LMCA P AOL YHOO AAPL NOK RIMM

For investors who continue to be impressed by satellite delivery platform, Samsung is about to demonstrate exactly why I have been insisting for quite some time that the IP standard is the future. Although the company will initially offer the service for free through the customers of the new Galaxy phones, it said that it will make it available to any competing device. Music that is purchased through the service will be stored on the cloud and will then appear on all devices owned by the consumer, both on the cloud and locally for off-line listening.

The best part of all of this is that Samsung will allow users to upload and store their own music to the cloud so it can be accessed from either their personal computers or smartphones.

So the question is, what will be the motivation for customers to continue to pay more money for a one-way satellite music service? With Sirius reporting 7 million cancellations for 2011 and 4 million the year before, I wonder what type of impact this new competition will have on its service. That's assuming investors consider Samsung a threat to Sirius' so-called "monopoly."

What exactly is the future of satellite radio? It is hard to say at this point that it has one, absent a cloud strategy.

The satellite delivery mechanism is limited in its ability to engage the 21st century consumer. Sirius XM would have been a good idea in 1995. However, in 2012 and beyond, unless you have a cloud strategy and are based on the IP platform you are a dinosaur or, as Rocco Pendola recently suggested, you become extinct.

However, the winner of all of this continues to be Liberty Media, which seems to care very little about Sirius' business and appears interested in acquiring the company solely for its assets, which include $8 billion in future tax benefits. Remarkably, Sirius NOLs, or Net Operating Losses, which are currently valued at $8 billion, are more valuable now than the entire company, whose market cap has fallen to $7 billion.

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