So now that we have the full data from both XM and Sirius for 4Q06, let's look at my favorite metric: gross subscribers. Again, the reason why I like looking at gross subs is because it shows an untainted view of market penetration. 

And what a difference a year makes.

Looking at 2005, it's clear that XM held the dominating position in gross subscriber additions. Even in the fourth-quarter of 2005, XM still held out past Sirius even despite "the Stern Effect" (now being referred to as "the Stern Bubble" by Sirius management). When 2006 rolled around, XM still continued to hold its own, but by Q4 Sirius made a massive jump.

For the first time in satellite radio history, Sirius outpaced XM in gross subscribers for the quarter. This is significant.

Sirius now is at nearly the same number of subscribers as XM was a year ago. In 2006, the reasoning behind XM's poor net subscriber additions was that churn restricted net growth. I'd be interested to see if Sirius follows this trend, or whether they will be able to learn from XM and keep churn in check.

Either way, it's clear that for the moment, the tide has turned.

Now that we have the 4Q06 numbers, we can take a look at gross subscriber additions. The reason why gross subscribers are important is shows the exact market penetration of each company and how well they're attracting new subscribers.

So in Q4 2006, XM added 1,064,887 gross subscribers (when compared to 1,373,876 in Q4 2005). For the full year in 2006, XM added 3,866,481 gross subscribers (compared to 4,130,437 in full-year 2005).

Above is a graph that illustrates the quarterly gross subscriber additions from the beginning of 2005 through the EOY 2006.

It's obvious that XM's momentum has slowed, even when you remove churn (people who have dropped the service) and just look gross subscriber additions, it's clear that XM's subscriber growth rate is softening.

The big hit comes from the retail side of things, where 4Q06 retail subs were 540,474 versus 935,707 in 4Q05, while OEM gross subscribers are actually up for the fourth quarter (524,413 vs 438,169).

Sirius Canada said they have surpassed 300,000 paying subscribers with more than 100,000 of those subscribers joining since November 22, 2006.

According to NPD Group, Sirius was the preferred choice for satellite radio this holiday season with nearly 8 out of 10 satellite radio shoppers choosing Sirius in December.

Since January 2006, Sirius has led the satellite radio industry in Canada with 75 per cent market share, within NPD's measured channels.

While everyone's twiddling their fingers waiting for the earnings call announcements to come in, investment analysts are busy running models and coming up with subscriber estimates for the year.

This morning, UBS analyst Lucas Binder wrote in a client note that he expects XM to end 2007 with 9.1 Million subscribers, adding that about 1.5 million of the subscriber additions will occur by the second half of 2007.

“We believe the difficult retail environment and slower than expected rollout for original equipment manufacturer (OEM) factory installs will push positive net additions growth toward the second half of 2007 when we may see subscriber recovery,” Binder wrote.

[Forbes]