Goldman Sachs analyst Mark Wienkes has lowered his target price for XM radio, based on its Q2 numbers. The satellite radio service will continue to function, merged or unmerged, but after ten years, it has missed its opportunity in the marketplace.

XM radio, which at one time traded in the US$40s, is now trading at around $9/share, and Mr. Wienkes that’s still to high and has lowered his target price from $6.50 to $5.00

The Goldman Sachs analyst sees rough times ahead for satellite radio thanks to lower auto sales, a principle source for new subscribers.

"Specifically, we believe the ultimate universe for satellite radio is increasingly impaired by a both lowered OEM production levels and an array of lower cost/higher value alternatives that may prevent the medium from gaining the critical mass necessary to drive attractive risk adjusted returns to shareholders," Mr. Wienkes said.

Unnamed in those "lower cost/higher value alternatives" were a host of modern alternatives: Internet subscription music services, iTunes, the iPod, the iPhone with apps like AOL radio and Pandora and terrestrial HD radio with connections back to iTunes.

"In our view, with the rapid increase in adoption of competing streaming media technologies and a falling demand amongst the under 44-year-old demographics, we have to wonder if, after nearly 10 years since inception, satellite radio has missed its opportunity as a mass market product," Mr. Wienkes noted.

Sirius Satellite Radio and XM Radio have been eager to merge due to competition for a small audience and tough economics, but the federal government hasn’t been keen on the idea until recently -- and will impose some tough measures to satisfy antitrust issues. The intense focus on the merger as a solution to their problems may have allowed technology to pass satellite radio by.