Apple Inc. (AAPL), Pandora Media Inc (P): Lack of Innovation Could Sink Technology’s Titanic

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The market still expects Apple Inc. (NASDAQ:AAPL) to blow their minds at each and every product launch. In the recent past, the company has not lived up to these high expectations. There were high hopes from Apple Inc. (NASDAQ:AAPL)’s annual Worldwide Developers Conference. The street had been speculating on the launch of a cheaper iPhone, smartwatch, TV, payment solutions etc. The biggest product news from the WDC was the launch of iOS 7. Apple also launched Macbook Air and announced the new Mac Pro, Apple Inc. (NASDAQ:AAPL)’s fastest computer.

Apple Inc. (NASDAQ:AAPL)

iOS 7

Apple has been a pioneer in its field for so long that consumers do not expect it to play ‘catch-up.’ With the release of iOS 7, Apple is catching up to Google Inc (NASDAQ:GOOG)’s Android and Research In Motion Ltd (NASDAQ:BBRY)’s BB10. The biggest change to the iOS is the new control center feature. This feature allows users to swipe up for various tools such as music, flash light etc. This feature is already a common one for users of Android.

The Google Inc (NASDAQ:GOOG) Drive clone, Airdrop, is also coming to mobile along with some changes to photo features. The company also announced minor changes to their famous digital assistant Siri. The application will now be able to perform a wider range of tasks including a male voice, adjusting brightness or playing voice mail etc.

Apple Inc. (NASDAQ:AAPL) has also made some significant changes to the visual aspects of the iOS. The operating system will have a new color palette and typography. The new icons are attractive and impact the overall attraction of the OS.

The aim of this iOS 7 upgrade is to increase the ‘stickiness’ of the platform. Stickiness refers to increasing the loyalty in existing users by reducing the gap between current offerings and market standards. Improving icons and Siri’s male voice might achieve the goal of increasing platform ‘stickiness’ but does not go a long way in terms of innovation. The control center, application ability to run in the background etc. all seem an effort to catch up to Android.

The new operating system is now available to developers in the beta version, but the consumer launch will be in the fall. Apple Inc. (NASDAQ:AAPL) will match this with the launch of its newer models of iPhones and iPad, also expected in the fall. The operating system has been limited to iPhone 4, iPad 2 and later models.

Streaming Radio

The market has been speculating on Apple launching a radio service similar to Pandora Media Inc (NYSE:P). Bloomberg started the rumors late last year that Apple is planning to provide a streaming radio service from its iTunes platform. The market considered this ‘Apple Radio’ to be the death of Pandora Media Inc (NYSE:P), which still struggles to generate profits despite growth in revenues. A primary weakness of Pandora Media Inc (NYSE:P)’s business model is the high royalty rate it pays to record labels. The high bargaining power and long term relationship of Apple Inc. (NASDAQ:AAPL) with record studios automatically places the giant in a better position to pay lower royalties.

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