3 Implications the iPhone Creates for HD Radio

Back in March we wrote:

"Wireless Internet in the car is still several years away. (No one is going to stream Internet stations via their cellular connection right now particularly given its low bandwidth and the way carriers charge for data.) Even wireless Internet in the home is still far from ubiquitous."

Although the we still believe this statement to be true, recent developments tied to the iPhone may allow early adopters to use streaming radio on their phones (and thus, in their cars) THIS YEAR.

On Friday the New York Times wrote an article about a new download application that AOL has developed for the iPhone. This new application will allow iPhone users to take advantage of the 3G network to listen to their favorite Internet radio stations. Better yet, using the phone's GPS, the application will actually tune to the digital stream from the nearest CBS station which is now partnering with AOL Radio.

Without question, the 3G network will finally make new streaming applications viable over the phone. Of course, we are still a long way from having the majority of Americans willing to fork over $30 per month for unlimited data plans from the carriers...but pricing will come down.

So what does this development mean for the HD Radio Alliance.

We think it is three-fold:

1) This announcement further validates our belief that HD Radio has rapidly shrinking window of opportunity.

2) This announcement and coming onslaught of other streaming radio applications tied to the iPhone (e.g., Pandora, Last.fm) will only further steal buzz from HD Radio's marketing efforts. The question has to be asked: "Will early adopters ever embrace HD Radio or will HD Radio only happen via brute force (i.e., via car manufacturers)?"

3) On the positive side, terrestrial radio appears to finally be willing to embrace new mediums that may cannibalize their OTA broadcast revenue...because they realize this is the future.

Note that on (1) we did NOT say that the window was closed. But things are getting interesting and we would not want it any other way!