Bezos currently offers customers unlimited two-day shipping for any Amazon item sold by its warehouse. Customers also receive unlimited access to videos and Kindle rentals. All of this comes for only $79 per year.
Sirius investors will argue that this low cost program is one of the reasons why Amazon's margins have been so low. But so what? That's not what is important at this point. Sirius needs to understand that it's a no-brainer for Amazon to add music streaming to this package. And getting access into the vehicle is certain to come next.
Think of how easy it would be to stream audio books in a couple of years, or to have the option to buy after a brief sample.
As it stands, there are many who still question whether Sirius's business model is sustainable. And I'm curious to know what Sirius majority owner Liberty Media (LMCA) feels about this new threat from Amazon. Liberty spent all of 2013 working its way up to majority ownership of Sirius. In January, Liberty chairman John Malone offered to buy the remaining portion of Sirius for $3.68 per share.
Investors once laughed at this offer and called it Liberty a joke. But with Sirius stock now trading below the offer price and Amazon gearing up to launch an attack, I don't see this as a laughing matter.
Despite stiff competition, Sirius has done the impossible. But beating Jeff Bezos may prove truly impossible.
At the time of publication, the author was long AAPL but held no position in any of the other stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.