XM/Sirius and the Perils of Undifferentiated Differentiation

One story behind the XM/Sirius merger announced today is how much money — perhaps a half-billion or more — the two companies spent trying to differentiate themselves in the minds of radio consumers. Other than to a rabid few, the result was de nada: most people just called them “those satellite radio guys”, and never bothered any more to attempt to keep straight who, precisely, was whom.

The upshot: While it’s great fun letting the marketers loose trying to produce something distinct in consumers’ minds, in a nascent market where no-one knows what the real business or customers look like the marketers are chasing a moving target — and the result is an expensively undifferentiated differentiated product.

As a quasi-related aside, I love how the two companies are emphasizing this is a “Merger of Equals”. Nothing like beating people about the headline-head with that sort of thing and hoping they believe it.

Related posts:

  1. Stern? Be Serious, Sirius
  2. Internet Killed the Radio Star
  3. The Perils of VC Funding
  4. Euronext and Famous Franco-German Solutions
  5. Free Radio is for Wimps

Comments

  1. I guess a headline like “Two Money-losing Dogs Roped Together” would be a little too long :-)

  2. jeremy liew says:

    You raise a great point – when to emphasize branding as the competitive differentiator in a new consumer technology category. I believe that there are three phases of adoption of a new consumer technology; in the first, distribution is paramount, in the second product/user experience is critical, and only in the third phase, when the category is well established in the eyes of consumers, does competition come down to branding. I posted about this at the Lightspeed Venture Partners blog earlier this month – if you’re interested click on my name in this comment

  3. Lee D says:

    At the ground level, I have asked some of our hardware partners what this will mean for our end-users in terms of the interoperability of the tuners that are already in service, and the implications of the merger on the hardware maker’s license agreements.
    Scroll down to the bottom of my blog post:
    http://businessopinions.blogspot.com/2007/02/more-blogging-on-xmsirius-merger.html
    I hope to be able to report some impressions and opinions from the manufacturers in the next couple of days.

  4. worth says:

    Anyone else bothered by the wording of anti-trust concerns being put to rest? It went something like “the FCC has a rule against both spectrums being owned by one entity, but Chairman Whomever said he expects the rule to be changed.” Huh?

  5. Lee D says:

    As a follow-up, here’s some excerpts of what some CE insiders think (as long as I promised not to attribute any quotes to them!):
    http://businessopinions.blogspot.com/2007/02/loose-talk-about-proposed-xmsirius.html