Apple Inc. (AAPL), Google Inc (GOOG): Pandora Media Inc (P)’s Problems Are Just Beginning

Two-thirds of 79% is 52% — just over half. These users could all flee the service once iTunes Radio is rolled out.

Google is getting into music, too
But it isn’t just Apple. For now, Android owners don’t have an integrated alternative to Pandora, but that could change. This year, Google took an unprecedented step forward in the music arena. In May, it released Google Inc (NASDAQ:GOOG) Play All Access, a subscription-based music streaming service.

Fundamentally, Google Inc (NASDAQ:GOOG) Play All Access and Pandora are vastly different products. The former isn’t free — it requires a monthly subscription, and is far more comparable to Spotify than Pandora. But a subscriber to All Access isn’t likely to use Pandora. All Access has the same built-in radio functionality as Pandora, and gives users the ability to play any song at any time should they want to.

Yet, while All Access isn’t likely to dent Pandora Media Inc (NYSE:P)’s numbers by a meaningful amount, All Access isn’t just another of Google Inc (NASDAQ:GOOG)’s silly side projects. The company has said it intends to bring the app to iOS — it clearly sees a need for the product as part of Google Inc (NASDAQ:GOOG)’s larger online ecosystem.

Investing in Pandora
Pandora is a stock that continues to baffle me. Although the company offers a great service, it isn’t profitable. For now, Pandora remains a growth story, dependent on adding new listeners and more revenue in the hopes that — one day — it could replace terrestrial radio.

The only problem is that the company has innumerable competitors, not the least of which is Apple Inc. (NASDAQ:AAPL). When the Cupertino giant releases iOS 7 next month, iTunes Radio will suddenly become embedded in the mobile devices of the majority of Pandora’s listeners.

As iTunes Radio offers identical functionality and better integration, there’s little reason for these listeners to stick with Pandora. Android offers some safety, but that might not always be the case. With Google Inc (NASDAQ:GOOG) Play All Access, the search giant clearly sees a need to get a toehold in the music space.

No doubt, Pandora Media Inc (NYSE:P)’s been a great short-term investment. But longer-term, the company appears deeply challenged.

The article Pandora’s Problems Are Just Beginning originally appeared on and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Pandora Media (NYSE:P). The Motley Fool owns shares of Apple and Google.

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