How Apple will kill satellite radio this summer

Satellite radio will die soon anyway, but Apple will accidentally perform a mercy killing of Sirius XM Radio this summer. That is, if the rumors are true (and they probably are).

The first rumor is that Apple will ship in June or July a new iPhone and a new iPod Touch, both of which containing a new Broadcom BCM4329 chip that would give the gadgets 802.11n wireless. That would boost Wi-Fi, but even more interestingly enable the devices to broadcast music to any car stereo via FM. (Users simply set their car radios to the "station" that the iPhone or iPod is broadcasting on, and they can play over car speakers whatever the iPhone is playing. The feature would enable only buyers of new iPhones and new iPod touches to play audio in any car with an FM radio.

The second rumor is that both devices will get stereo Bluetooth audio streaming. That would enable anyone with a car sound system that supports Bluetooth to play iPhone and iPod Touch audio wirelessly. Although using this feature would require the right kind of car stereo, it would not require a new iPhone or iPod Touch — current devices will be able to take advantage of it.

It's likely that both of these rumors are true. If so, just about every iPhone and iPod Touch user will be able to easily play music, podcasts, streaming audio and other noise directly but wirelessly from their gadgets.

One of the most popular (and fastest growing) application types on iPhones is Pandora and its ilk, including iheart radio, Public Radio and other streaming services. People are getting used to the idea of listening to exactly what they want to hear at any time on their phones.

So how does that change things for Sirius XM Radio?

First of all, the company is hanging on by a thread. I've published the numbers before. Suffice it to say that Sirius XM Radio has so much debt that only radical increases in subscribers could allow it to survive. Only the opposite is happening. The company gets most of its new subscribers from new-car buyers who choose the satellite radio upgrade. But because of the recession, far fewer people are buying cars, and those who do buy cars aren't choosing upgrades like they used to.

Worse, the company's financial problems mean that there's no way they'll be able to afford superstars like Howard Stern in the foreseeable future.

The satellite radio proposition has always been that you get superior radio, but you have to pay a lot for it.

Changes in the iPhone mean that the best "radio" experience will be via iPhone, and at no additional charge beyond what you're going to pay for the phone and data anyway.

Sirius just can't compete with that. But even more importantly, the cultural movement toward using cell phones in general and iPhones in particular, for listening to "radio" in cars will become so conspicuous that no other company will want to loan money to Sirius -- or aquire it or partner with it. Sirius will completely run out of options.

Technology historians will one day observe what is already becoming obvious. Using rockets and orbiting satellites to deliver noise to car stereos is just a terrible idea.

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ADDENDUM: I've noticed an enormous number of comments here, via e-mail and on Twitter, Digg and elsewhere that convey the idea that capabilities for streaming audio rumored to be coming to iPhone and iPod Touch in fact are not new in the industry, and therefore the addition of those features to Apple products won't change anything.

But the existence of a feature or capability doesn't change culture -- what real people actually do. In fact there is always a pretty significant time gap between the existence of any major technology and the tipping point of adoption that signifies a broad cultural trend.

Perfect example: Listening to MP3s on cell phones was possible for many years, but hardly anyone did it until the iPhone came out. Now it's very widespread.

The same phenomenon affects social networks and similar services, too. Twitter was around for more than two years before most people had even heard of it.

In fact every long-term cultural change is preceded by a long delay between what's possible and what's practiced by a huge number of people.

In the case of streaming audio from a cell phone to a car stereo, yes, it's been possible for years.

My argument is that because the iPhone is so dominant (by far the largest-selling single cell phone model ever), and its user base so active (half of all mobile Web traffic, for example, comes from iPhones), that it's the addition of one convenience feature (wireless audio streaming) combined with another cultural shift that has already happened (cell phone-based audio) that will change the culture.

I'm predicting that knowledge of it will be so widespread that your average car buyer will be aware of the fact that he or she can just use an iPhone as a superior alternative to satellite radio. And that's what will affect satellite radio subscriptions.

Just to recap: When it comes to cultural shifts, it doesn't matter what's possible. It matters only what's practiced. Mass behavioral shifts require a tipping point, and my column here argues that easy streaming audio in Apple gadgets is precisely that tipping point.