X-Virus-Scanned: clean according to Sophos on Logan.com Return-Path: Sender: To: lml@lancaironline.net Date: Tue, 02 May 2006 22:37:18 -0400 Message-ID: X-Original-Return-Path: Received: from imo-m20.mx.aol.com ([64.12.137.1] verified) by logan.com (CommuniGate Pro SMTP 5.0.9) with ESMTP id 1088456 for lml@lancaironline.net; Tue, 02 May 2006 08:38:11 -0400 Received-SPF: pass receiver=logan.com; client-ip=64.12.137.1; envelope-from=MikeEasley@aol.com Received: from MikeEasley@aol.com by imo-m20.mx.aol.com (mail_out_v38_r7.5.) id q.25a.a443cff (16335) for ; Tue, 2 May 2006 08:37:22 -0400 (EDT) From: MikeEasley@aol.com X-Original-Message-ID: <25a.a443cff.3188ac81@aol.com> X-Original-Date: Tue, 2 May 2006 08:37:21 EDT Subject: Re: [LML] Re: Weather avoidance frustration X-Original-To: lml@lancaironline.net MIME-Version: 1.0 Content-Type: multipart/alternative; boundary="-----------------------------1146573441" X-Mailer: 9.0 Security Edition for Windows sub 5300 X-Spam-Flag: NO -------------------------------1146573441 Content-Type: text/plain; charset="UTF-8" Content-Transfer-Encoding: quoted-printable Content-Language: en I think that link will only work for subscribers. Here's the article. I=20 hope Aviation Consumer excuses my copyright violation! =20 Mike Easley =20 Lost in Space: Snags for WSI, XM =20 WSI weatherlink buyers will have to switch to Sirius Radio (and buy a new=20 box) while XM=E2=80=99s financials aren=E2=80=99t encouraging. =20 =20 WSI will end its datalink service provided by the twin beam Mobile Satellit= e=20 Ventures system, above. Its new Sirius-based system will be compatible with= =20 existing displays.When cockpit datalinked weather exploded into the aviatio= n=20 market barely four years ago with too much hardware and too many companies,= =20 we predicted a nasty shakeout. But even we didn=E2=80=99t expect this. Just= as the=20 market matures into what appeared to be two stable, competitive players=E2= =80=94the XM=20 Radio-based WxWorx and WSI=E2=80=99s Inflight service=E2=80=94neither servi= ce appears to be=20 as rock-solid as we thought. Two developments within days of each other may= =20 affect both services in ways that will clearly infuriate some customers and= =20 worry others. =20 WSI announced in February that it will switch satellite providers from a =20 third-party commercial company called Mobile Satellite Ventures to Sirius =20 Satellite Radio, XM=E2=80=99s rival in the space-based broadcasting business= . Given XM=E2=80=99s =20 success and the reliability of the service, WSI=E2=80=99s switchover makes s= ense. =20 But the nasty surprise is that owners who bought WSI=E2=80=99s AV100 and AV2= 00 =20 satellite receivers for between $3500 and $5000 will soon have an obsolete b= ox =20 occupying the avionics bay. =20 Those receivers won=E2=80=99t work with the Sirius signal and will have to b= e =20 replaced, probably by next year. =20 Meanwhile, the financials at XM Radio look rocky, making some buyers who=E2= =80=99ve =20 bought into that technology understandably nervous. A week before the WSI =20 announcement, Pierce J. Roberts Jr., a key XM director, left the company, =20 declaring that XM is headed for a financial crisis if it doesn=E2=80=99t mak= e major =20 changes. =20 Given the piddly size of the aviation data market, an owner who bought the X= M=20 service for weatherlink can be forgiven for wondering if that service will=20 be tossed overboard to stanch XM=E2=80=99s cash hemorrhaging. We=E2=80=99re= told that this isn =E2=80=99t likely but frankly, we wouldn=E2=80=99t expect to hear anything=20= else. =20 WSI Although we=E2=80=99ve heard a few complaints about satellite coverage gaps= in WSI=E2=80=99 s service, owners have praised the service for its robustness and =20 sophisticated radar and text products. WSI has suffered for not having as ma= ny display=20 options as does XM, but it still appeared to be a comer. =20 Evidently, however, the satellite service WSI picked to deliver its service= =E2=80=94 Mobile Satellite Ventures=E2=80=94isn=E2=80=99t up to the task. The WSI arch= itecture uses a=20 single satellite capable of forming =E2=80=9Cspot beams=E2=80=9D for data de= livery. WSI=E2=80=99s =20 service depends on a pair of beams to deliver coverage in the U.S. and Canad= a. =20 However, some users have encountered service gaps in the U.S., which WSI=E2= =80=99s =20 Paul Devlin acknowledges. He told us the problem is in the receiver software= , =20 which holds onto one beam too aggressively without sensing and picking up th= e =20 second beam. As a result, users experience slow or no data service. =20 Isn=E2=80=99t there a technical fix for this? When we contacted WSI in Febru= ary, =20 Devlin declined to provide details, explaining that more information would b= e =20 available in a few weeks. Meanwhile, WSI is devoting its resources to develo= ping=20 a new datalink receiver for use with Sirius Satellite Radio system, a =20 clean-sheet box that will be about the same size as the current WSI technolo= gy but=20 will require a new antenna and wiring harness. The antenna, said Devlin, =20 will be the same size and have the same hole pattern and the current antenna= for =20 the AV100 and AV200 receivers. =20 The hardware is expected to be available by the end of 2006 or early 2007. =20 Devlin said WSI would announce shortly when its current satellite service =20 through MSV will end, but we believe it will be in 2007. =20 WSI says it will try to make the switchover to Sirius from the MSV service =20= =E2=80=9C as appealing as possible=E2=80=9D and plans to offer a discount price of $15= 00 for the=20 Sirius receiver. No prices have been set for new Sirius-capable receivers=20 from WSI. If we owned a WSI receiver, we would be on the phone to the compa= ny=20 to negotiate the fairest accommodation possible. Our sense is that WSI want= s=20 to do right by its customers. =20 XM Woes When XM=E2=80=99s Roberts departed the board, he bluntly said that given th= e company=E2=80=99 s current strategy, =E2=80=9Cthere is, in my view, a significant chance of=20= a crisis=20 on the horizon.=E2=80=9D XM has hit the capital markets heavily to fund bri= sk growth=20 in subscribers, but it continues to lose money. =20 =20 Despite XM concerns, Garmin=E2=80=99s XM-based GDL69, above, remains the le= ading=20 choice for weatherlink. Owners report excellent performance.Although XM= =E2=80=99s=20 revenue increased in 2005, the company lost $270 million during the =20 October-December period, up substantially from the $190 million it lost duri= ng the same=20 period a year earlier. The insider squabble appears to be subscriber growth= =20 versus profitability. Pierce favored less borrowing and growth and more cos= t=20 control to turn the company black sooner. Either way, XM=E2=80=99s CEO, Hugh= Panero, said=20 the company would reach profitability by the end of 2006, with 9 million=20 subscribers. =20 If there=E2=80=99s good news for aviation datalink subscribers, it=E2=80=99s= this: A year =20 ago, XM=E2=80=99s revenue from datalink services was trivial but has been st= eadily =20 increasing. Although XM has only about 19,000 data subscribers, it earned =20 low-cost revenue from them in 2005 and the datalink market is expected to c= ontinue=20 growing. Moreover, while XM has to spend about $141 in marketing costs to=20 bring on a single entertainment subscriber, data subscribers are profitable=20= from=20 day one, because other companies bear the marketing costs. =20 =E2=80=9CWe=E2=80=99re beginning to be noticed at the board level,=E2=80=9D=20= says WxWorx=E2=80=99s Mick =20 Gosdin. =E2=80=9CThey recognize the data side is an untapped market. It=E2= =80=99s basically a =20 freebie for them. It=E2=80=99s something they hadn=E2=80=99t really thought=20= of until we came =20 along.=E2=80=9D =20 Gosdin says he understands buyer concern about XM=E2=80=99s survival but he=20= explains =20 that datalink continues to be such a strong, low-cost growth market=E2=80= =94both in =20 aviation and marine=E2=80=94that XM will increasingly rely on it for revenue= . In other=20 words, although the volume is low, the profitability is high enough that =20 datalink seems unlikely to be tossed aside to make room for more profitable=20= =20 bandwidth use. =20 Recommendations Given the number of recent instances of avionics buyers having been left=20 high and dry with dead-end technology, we=E2=80=99re not quite so sanguine=20= about XM=E2=80=99s=20 prospects. Its survival may depend less on subscribers and more on how=20 friendly the capital markets are toward funding its continued rapid growth=20= until it=20 turns the corner. =20 In our view, datalink is such a lucrative market for XM that it will survive= =20 but the larger issue is whether XM itself will prevail. It=E2=80=99s unreali= stic to =20 assume there=E2=80=99s no chance that it will go belly up, just as other hig= h-tech, =20 high-risk ventures have. For now, we wouldn=E2=80=99t delay or advise agains= t buying =20 XM-based weather datalink, but buyers should know there are unknown risks in= =20 doing so. Our guess is that XM will survive but that=E2=80=99s just our gues= s. =20 WSI, unfortunately, faces more difficult circumstances. The company is fully= =20 aware that it has to dig itself out of a deep hole. Ideally, it should buy=20 back all of the AV100 and AV200 receivers on a pro-rata basis, but that=E2= =80=99s not=20 likely to happen because it will result in an untenable business plan which= , =20 ultimately, serves neither WSI nor its customers. =20 We=E2=80=99re sure that many owners won=E2=80=99t be pleased with WSI=E2=80= =99s offer of a drop-in =20 replacement for Sirius reception for $1500. In any case, WSI isn=E2=80=99t c= urrently a=20 new purchase option and the company will have to do some careful fence=20 mending to keep the subscribers it does have aboard and interested in conve= rting=20 to the Sirius Radio option. And don=E2=80=99t forget, Sirius is also losing= money and=20 has fewer subscribers than XM. Its recent deal to sign Howard Stern=20 notwithstanding, Sirius=E2=80=99 profitability is far from assured. =20 Other options? Two come to mind: Honeywell/Bendix/King=E2=80=99s Wingman ser= vice and =20 the developing FAA-sponsored ADS-B system. As we reported in the August 2004= =20 issue, the Wingman system is fully built out but works reliably only at mid-= =20 and high-altitude and can seldom be used on the ground before departure. =20 For a report on the ADS-B system, see the August 2005 issue. This technology= =20 has promise and although the hardware is available and the FAA insists it= =E2=80=99s=20 the shape of the future, the agency hasn=E2=80=99t funded the ground networ= k and it=E2=80=99s=20 not known when that will happen, making it the iffiest of all the choices.=20= =20 For now, XM still appears to be the most cost-effective, reliable choice in=20= =20 datalink. But know this: Neither of the satellite-based options are without=20 risk for purchasers. -------------------------------1146573441 Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable Content-Language: en
I think that link will only work for subscribers.  Here's the=20 article.  I hope Aviation Consumer excuses my copyright violation!
 
Mike Easley
 
Lost in Space: Snags for WSI, XM

WSI weatherlink buyers will have to sw= itch=20 to Sirius Radio (and buy a new box) while XM=E2=80=99s financials aren=E2= =80=99t=20 encouraging.=20

WSI will end its datalink service provided by the twin beam Mobi= le=20 Satellite Ventures system, above. Its new Sirius-based system will be=20 compatible with existing displays.

When=20 cockpit datalinked weather exploded into the aviation market barely four yea= rs=20 ago with too much hardware and too many companies, we predicted a nasty=20 shakeout. But even we didn=E2=80=99t expect this. Just as the market matures= into what=20 appeared to be two stable, competitive players=E2=80=94the XM Radio-based Wx= Worx and=20 WSI=E2=80=99s Inflight service=E2=80=94neither service appears to be as rock= -solid as we=20 thought. Two developments within days of each other may affect both services= in=20 ways that will clearly infuriate some customers and worry others.=20

WSI announced in February that it will switch satellite providers from a=20 third-party commercial company called Mobile Satellite Ventures to Sirius=20 Satellite Radio, XM=E2=80=99s rival in the space-based broadcasting business= . Given XM=E2=80=99s=20 success and the reliability of the service, WSI=E2=80=99s switchover makes s= ense.=20

But the nasty surprise is that owners who bought WSI=E2=80=99s AV100 and=20= AV200=20 satellite receivers for between $3500 and $5000 will soon have an obsolete b= ox=20 occupying the avionics bay.=20

Those receivers won=E2=80=99t work with the Sirius signal and will have t= o be=20 replaced, probably by next year.=20

Meanwhile, the financials at XM Radio look rocky, making some buyers who= =E2=80=99ve=20 bought into that technology understandably nervous. A week before the WSI=20 announcement, Pierce J. Roberts Jr., a key XM director, left the company,=20 declaring that XM is headed for a financial crisis if it doesn=E2=80=99t mak= e major=20 changes.=20

Given the piddly size of the aviation data market, an owner who bought th= e XM=20 service for weatherlink can be forgiven for wondering if that service will b= e=20 tossed overboard to stanch XM=E2=80=99s cash hemorrhaging. We=E2=80=99re tol= d that this isn=E2=80=99t=20 likely but frankly, we wouldn=E2=80=99t expect to hear anything else.=20

WSI
Although we=E2=80=99ve heard a few complaints about satelli= te coverage=20 gaps in WSI=E2=80=99s service, owners have praised the service for its robus= tness and=20 sophisticated radar and text products. WSI has suffered for not having as ma= ny=20 display options as does XM, but it still appeared to be a comer.=20

Evidently, however, the satellite service WSI picked to deliver its=20 service=E2=80=94Mobile Satellite Ventures=E2=80=94isn=E2=80=99t up to the ta= sk. The WSI architecture=20 uses a single satellite capable of forming =E2=80=9Cspot beams=E2=80=9D for=20= data delivery. WSI=E2=80=99s=20 service depends on a pair of beams to deliver coverage in the U.S. and Canad= a.=20

However, some users have encountered service gaps in the U.S., which WSI= =E2=80=99s=20 Paul Devlin acknowledges. He told us the problem is in the receiver software= ,=20 which holds onto one beam too aggressively without sensing and picking up th= e=20 second beam. As a result, users experience slow or no data service.=20

Isn=E2=80=99t there a technical fix for this? When we contacted WSI in Fe= bruary,=20 Devlin declined to provide details, explaining that more information would b= e=20 available in a few weeks. Meanwhile, WSI is devoting its resources to develo= ping=20 a new datalink receiver for use with Sirius Satellite Radio system, a=20 clean-sheet box that will be about the same size as the current WSI technolo= gy=20 but will require a new antenna and wiring harness. The antenna, said Devlin,= =20 will be the same size and have the same hole pattern and the current antenna= for=20 the AV100 and AV200 receivers.=20

The hardware is expected to be available by the end of 2006 or early 2007= .=20 Devlin said WSI would announce shortly when its current satellite service=20 through MSV will end, but we believe it will be in 2007.=20

WSI says it will try to make the switchover to Sirius from the MSV servic= e=20 =E2=80=9Cas appealing as possible=E2=80=9D and plans to offer a discount pri= ce of $1500 for the=20 Sirius receiver. No prices have been set for new Sirius-capable receivers fr= om=20 WSI. If we owned a WSI receiver, we would be on the phone to the company to=20 negotiate the fairest accommodation possible. Our sense is that WSI wants to= do=20 right by its customers.=20

XM Woes
When XM=E2=80=99s Roberts departed the board, he bluntl= y said that=20 given the company=E2=80=99s current strategy, =E2=80=9Cthere is, in my view,= a significant=20 chance of a crisis on the horizon.=E2=80=9D XM has hit the capital markets h= eavily to=20 fund brisk growth in subscribers, but it continues to lose money.=20

<= /TR>Although=20 XM=E2=80=99s revenue increased in 2005, the company lost $270 million during= the=20 October-December period, up substantially from the $190 million it lost duri= ng=20 the same period a year earlier. The insider squabble appears to be subscribe= r=20 growth versus profitability. Pierce favored less borrowing and growth and mo= re=20 cost control to turn the company black sooner. Either way, XM=E2=80=99s CEO,= Hugh=20 Panero, said the company would reach profitability by the end of 2006, with=20= 9=20 million subscribers.=20

If there=E2=80=99s good news for aviation datalink subscribers, it=E2=80= =99s this: A year=20 ago, XM=E2=80=99s revenue from datalink services was trivial but has been st= eadily=20 increasing. Although XM has only about 19,000 data subscribers, it earned=20 low-cost revenue from them in 2005 and the datalink market is expected to=20 continue growing. Moreover, while XM has to spend about $141 in marketing co= sts=20 to bring on a single entertainment subscriber, data subscribers are profitab= le=20 from day one, because other companies bear the marketing costs.=20

=E2=80=9CWe=E2=80=99re beginning to be noticed at the board level,=E2=80= =9D says WxWorx=E2=80=99s Mick=20 Gosdin. =E2=80=9CThey recognize the data side is an untapped market. It=E2= =80=99s basically a=20 freebie for them. It=E2=80=99s something they hadn=E2=80=99t really thought=20= of until we came=20 along.=E2=80=9D=20

Gosdin says he understands buyer concern about XM=E2=80=99s survival but=20= he explains=20 that datalink continues to be such a strong, low-cost growth market=E2=80= =94both in=20 aviation and marine=E2=80=94that XM will increasingly rely on it for revenue= . In other=20 words, although the volume is low, the profitability is high enough that=20 datalink seems unlikely to be tossed aside to make room for more profitable=20 bandwidth use.=20

Recommendations
Given the number of recent instances of avionic= s=20 buyers having been left high and dry with dead-end technology, we=E2=80=99re= not quite=20 so sanguine about XM=E2=80=99s prospects. Its survival may depend less on su= bscribers=20 and more on how friendly the capital markets are toward funding its continue= d=20 rapid growth until it turns the corner.=20

In our view, datalink is such a lucrative market for XM that it will surv= ive=20 but the larger issue is whether XM itself will prevail. It=E2=80=99s unreali= stic to=20 assume there=E2=80=99s no chance that it will go belly up, just as other hig= h-tech,=20 high-risk ventures have. For now, we wouldn=E2=80=99t delay or advise agains= t buying=20 XM-based weather datalink, but buyers should know there are unknown risks in= =20 doing so. Our guess is that XM will survive but that=E2=80=99s just our gues= s.=20

WSI, unfortunately, faces more difficult circumstances. The company is fu= lly=20 aware that it has to dig itself out of a deep hole. Ideally, it should buy b= ack=20 all of the AV100 and AV200 receivers on a pro-rata basis, but that=E2=80=99s= not likely=20 to happen because it will result in an untenable business plan which,=20 ultimately, serves neither WSI nor its customers.=20

We=E2=80=99re sure that many owners won=E2=80=99t be pleased with WSI=E2= =80=99s offer of a drop-in=20 replacement for Sirius reception for $1500. In any case, WSI isn=E2=80=99t c= urrently a=20 new purchase option and the company will have to do some careful fence mendi= ng=20 to keep the subscribers it does have aboard and interested in converting to=20= the=20 Sirius Radio option. And don=E2=80=99t forget, Sirius is also losing money a= nd has fewer=20 subscribers than XM. Its recent deal to sign Howard Stern notwithstanding,=20 Sirius=E2=80=99 profitability is far from assured.=20

Other options? Two come to mind: Honeywell/Bendix/King=E2=80=99s Wingman=20= service and=20 the developing FAA-sponsored ADS-B system. As we reported in the August 2004= =20 issue, the Wingman system is fully built out but works reliably only at mid-= and=20 high-altitude and can seldom be used on the ground before departure.=20

For a report on the ADS-B system, see the August 2005 issue. This technol= ogy=20 has promise and although the hardware is available and the FAA insists it= =E2=80=99s the=20 shape of the future, the agency hasn=E2=80=99t funded the ground network and= it=E2=80=99s not=20 known when that will happen, making it the iffiest of all the choices.=20

For now, XM still appears to be the most cost-effective, reliable choice=20= in=20 datalink. But know this: Neither of the satellite-based options are without=20= risk=20 for purchasers.

-------------------------------1146573441--

Despite XM concerns, Garmin=E2=80=99s XM-based GDL69, above, rem= ains the=20 leading choice for weatherlink. Owners report excellent=20 performance.