Sirius Clicks Its Heels

The new Stiletto portable device brings the Net to satellite radio.
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Sirius (SIRI) - Get Report brings Wi-Fi to portable satellite radio.

Well ahead of the key holiday shopping season, the New York pay-radio shop has introduced its Stiletto, a device that plays live satellite radio and also can record and play audio from Internet broadcasts and MP3s.

The Wi-Fi connection is unique to the satellite radio segment, though it is likely that rival

XM

(XMSR)

will have a similar offer eventually. With a broadband Internet access, Stiletto users can use the pre-installed Yahoo! music software to purchase songs and store them on the internal 2 gigabit flash drive.

While the cell-phone-sized Stiletto is not likely to be an iPod killer, the fact that it combines song downloads with live satellite radio may help to quiet critics who saw

Apple's

(AAPL) - Get Report

portable music dominance as a threat to pay radio.

Notably, the Stiletto works with most MP3 music formats, with the exception of Apple's iTunes.

The news comes as XM still struggles to get all its radios in compliance with

Federal Communications Commission

standards. The Washington, D.C., broadcaster previously had to

stop production of several radios due to violations of FM signal emission limits.

The emission issue is specific to radios that use FM signals to transmit XM's programming to devices like car radios. This FM signal allows users to play XM radio through their car or conventional audio equipment. If, for example the FM emissions are too strong, it could cause interference with other radio channels.

XM was the first of the extraterrestrial broadcasting duo to introduce portable radios that could play live satellite audio. The early lead by XM helped the company grow bigger, faster. But in the past year, XM's market share has been slipping as Sirius catches up.

An XM representative declined to comment on the company's new models coming to the market, but said that the company was always looking at ways to make the radios better.

But the Stiletto's arrival before Christmas, combined with XM's radio mishaps, should continue to feed Sirius' winning streak.

Sirius shares fell 4 cents to $3.91 and XM rose a dime to $13.52 in midday trading Tuesday.