Apple Inc. (AAPL) Needs to Lose or Open iTunes

Page 1 of 2

When iTunes began, its function was to make money for Apple Inc. (NASDAQ:AAPL) by promoting the sale of iPods. That fortuitous investment also gave consumers entry into the world of Apple Inc. (NASDAQ:AAPL), familiarizing them with the software and generating tremendous momentum when introducing the iPhone.

Apple Inc. (NASDAQ:AAPL)

Interestingly enough, originally Steve Jobs wanted to keep iTunes exclusive to Apple Inc. (NASDAQ:AAPL) products, a move that would have cost the company dearly in its expansion of iProducts.

I’m here to argue, despite the fact that iTunes currently dominates the world of digital music, Apple must set its iTunes music ecosystem free.

Why iTunes is unavailable for Android

Apple Inc. (NASDAQ:AAPL) leverages iTunes to make their products “sticky,” keeping the consumer within Apple’s walls, unable to go elsewhere. I met a young woman on a plane with an iPhone 5, and asked her why she chose to upgrade to the model.

“Because all my music is on iTunes, and choosing the iPhone just made everything so much easier.” Bingo. Point for Apple shareholders.

And according to this article on Forbes, written last October as to why Apple doesn’t allow iTunes anywhere else, “iTunes is not where Apple Inc. (NASDAQ:AAPL) makes its money. Apple makes money from its hardware, not software. Why should Apple reward people who have bought an Android device by making the iTunes ecosystem available to them? By making iTunes available to Android users, Apple would be strengthening a competition’s mobile platform.”

Unfortunately, iTunes grip on digital music is quickly being vaporized.

The competition

Aside of the obvious Google Inc (NASDAQ:GOOG) Music offerings to beef up its Android ecosystem, Apple faces two other major competitors.

Pandora Media Inc (NYSE:P)’s stock has actually increased in value since Apple announced iTunes Radio, designed to mimic Pandora’s streaming radio offering. At present, Pandora is rapidly being adopted into cars, posing a challenge to both Sirius Satellite Radio and terrestrial radio.

Pandora Media Inc (NYSE:P) is a great way to discover new songs and bands, and Apple’s move to combat it through it’s own radio service, despite its anticipated microscopic effect on revenues (0.5% estimated) was absolutely necessary.

Interestingly enough, according to TheStreet.com, for Pandora Media Inc (NYSE:P), “overall listener hours came in at 1.25 billion for June 2013, a 17% increase from 2012, but that’s off from May 2013′s, 1.35 billion hour total. Pandora’s overall share of radio listening also decreased between May and June, dropping modestly from 7.29% to 7.04%.” Does this imply the market is saturated and Apple is arriving very  late to the party?

What Apple Inc. (NASDAQ:AAPL) has not yet combated, but likely will, and must do so soon, is Spotify.

As an example – I have a friend who told me he had spent $700 on songs on iTunes in the past two years. Last month, he discovered Spotify where for $9.99 a month you get unlimited music, downloadable, of your choice, and without commercials. He now describes iTunes as “completely unnecessary.” How long before others follow suit with such recommendations?

Why Apple must open iTunes

According to co-founder Steve Wozniak during on Slashdot, “Apple’s real rise from the small market-share Macintosh company to the iProducts of today began with iTunes and the iPod. This turned out to be the second huge business which roughly doubled Apple’s ‘size.’ If you remember, we ported iTunes to Windows. We now addressed 100% of the world’s market with this integrated system (iPod/iTunes), and it began the era of Apple that we are now in. So why don’t we port iTunes to Android? Did something get closed up? I love Apple products and iTunes and wish it were on my Android products too.”

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!