1. Summary and Conclusion We believe that XM Satellite Radio should offer a subscription offering of 50+ channels for $10 per month. XM needs to acquire new customers and we recommend using the $100 million launch campaign as described in this report to generate significant customer adoption.2. Analysis of the situation. The companyXM Satellite Radio was founded in 1992 to provide radio entertainment via a satellite broadcast system. XM is an early stage company.Primary Issues· XM needs to define a business model, manufacturing process and marketing strategy.· XM has not yet launched a product, although its product is technologically feasible.· No company was able to provide national radio coverage in this way.b. CustomersRadio listeners are diverse and can be classified into a range of market segments. Listener characteristics include gender, age, ethnicity, location, and technology compatibility. Additionally, listeners have shifted from home listening to in-car listening.Primary Issues· Listeners vary in price sensitivity.c. CompetitorsXM's direct competition is SIRIUS. Competition is limited by the FCC, which regulates which new players can enter the satellite radio market. XM's indirect competitors include traditional radio companies, radio offered via satellite and cable TV, and Internet radio.Primary Issues· SIRIUS has first-mover advantage and intends to launch its service by the end of 1999.d. CollaboratorsXM will leverage relationships with receiver and chipset manufacturers to produce, distribute or sell its products. Target retailers will include major consumer electronics chains and aftermarket car stereo stores. XM also depends on national unions and the recording industry to produce new content for play over the air. The FCC also plays a silent role as the industry is regulated by the government.Key Issues· XM's collaborator network is complex. The company needs to minimize touchpoints to keep operations simple. Manufacturers need to agree to produce the technology and retailers need to promote the products. BackgroundIn 1997, the radio industry had recently completed major consolidation, and FM radio penetration rates had peaked at 77.6%, with stable growth rates over the past decade.Primary Issues· TV has become the medium of Favorite broadcast and radio stations are turning to advertising to support themselves.3. SWOT Analysis/Objective. StrengthsXM demonstrated its technical expertise by designing a working prototype for its technology. The Company also holds one of two existing FCC licenses for satellite radio broadcasting, operating essentially in a duopole market.b. WeaknessesXM needs to further develop the following business competencies: · Business model · Brand awareness · Distribution channels · Manufacturing capabilities/relationships · Access to capitalc. OpportunitiesXM can deliver a transformative radio experience to more than 61 million customers (Figure 2). 1).