Resnikoff’s Parting Shot: Pandora’s Dashboard

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Tough to say where Pandora ultimately lands.

Tim Westergren says the company is finally profitable, and Pandora is suddenly something your friends are using.  But despite a recent royalty resolution, Pandora still pays handsomely for content, and plenty of VCs now run away from that sort of overheard.  Others question whether the model is sustainable over the long term.

But perhaps Pandora continues to chug along in the black.  Or maybe Westergren, Tom Conrad and the rest surf into frothier times, and get rich on an acquisition.  Or, maybe Pandora truly lives up to its revolutionary potential, and becomes a serious component in the future of music consumption.  Or maybe, all of the above.

Just recently at CES in Vegas, Pandora was suddenly a big part of the future of in-car entertainment.  Among other things, near-term plans include a smart, voice-controlled integration into myFord Touch, and its embedded Sync upgrade.

Sure, the automobile industry is in the toilet, and the next-generation dashboard seems like jewelry on a dying patient.  No small point, as US-based car sales are slogging along at early-80s levels (10.4 million in 2009), though eventually, newer cars (and their dashboards) will replace older clunkers.

Automobile sales are expected to be sluggish in 2010 as well, though oddly, the dashboard is leaping forward.  Terrestrial and satellite radio providers used to worry about the iPod and talk-time on mobile phones, but now, internet radio is also creeping into the picture.  Why wait for WiMax or factory-installed mobile broadband?

Pandora isn’t waiting, that’s for sure.  The iPhone helped to change the entire growth trajectory at Pandora, and now, that momentum is spilling into the dashboard.  But even before the next-generation dashboards arrive, music fans are connecting their iPhones into their dashes through FM transmitting add-ons (Griffin’s iTrip, for example), or more primitive connections through an in-dash CD player or tape deck.

Indeed, the iPhone (and other smartphones) are the gateway drug for the automobile, skipping ahead of internet ubiquity.  What Ford is introducing is simply a more sophisticated, safer, and cooler Pandora integration, one packaged into a broader range of mobile-supplied apps (and other, non-mobile features like sophisticated navigation and in-car WiFi).

Beyond the smartphone app, the future will find Pandora more tightly integrated into the dashboard, right as the engine starts.  But in 2010, Pandora is leveraging its tremendous iPhone traction into one of the most important environments for music consumption.  It’s a giant baby step, and potentially the next big game-changer for Pandora.

Paul Resnikoff, Publisher.