Driven by decisions such as Hyundai's to factory-install XM radios in 100% of its new vehicles, Kagan opines that the country's largest satellite radio provider will achieve positive cash flow by 2007, while Sirius, its competitor, will likely take until 2008 to do so.

The two providers, XM and Sirius, currently dominate satellite radio in the United States. Although XM is the older of the two, Sirius has been steadily gaining ground--with its listener share climbing from 11% in 2003 to 26% in 2004, and expected to edge near 33% by the end of this year. XM currently has a total of over 150 Digital Channels, with 67 commercial free music channels included in the total, while Sirius has over 130 Digital Channels in total, including 65 commercial free music channels.

"Clearly, they've done a very good job of marketing their product and creating a buzz around the industry," said Michael Buckley, a senior analyst with Kagan.

Some industry observers, however, opt for a more cautious forecast.

"Not just with satellite radio, but any technology, there's a need for the consumer to see the value in a product, not just the early adopters," says Leo Kivijarv, Vice President at PQ Media in Stamford, Connecticut. "Consumers must see a need to have that technology."

Noting that of some $300 million in revenue the satellite radio industry generated in 2004, only $9 million came from advertising, Kivijarv and others believe that the industry will need to resolve the contradiction between its monetary needs and ostensibly ad-free service.

One idea that some industry insiders have floated is that of two types of subscriptions to satellite radio--a more costly one that would forgo advertising entirely, and a more modestly priced option that would allow some level of ads to appear.

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