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Assessing Apple’s iTunes Radio potential versus Pandora

Puneet Sikka

Why has Pandora reported a sequential decline in listener hours? (Part 3 of 5)

(Continued from Part 2)

Apple will be a threat to Pandora

Apple (AAPL) entered into the radio streaming space in September last year with a vision to dominate this segment, just like it has dominated the digital music downloads segment through its iTunes Store. And now, within six months, it has already skyrocketed ahead of Google (GOOG) Play Access and Spotify. Although Pandora (P) is the leading radio streaming service in the U.S., it understands the potential of iTunes Radio. In the previous parts of this series, we discussed how Pandora is still the undisputed ruler of this segment. However, Apple poses a bigger threat to Pandora.

Apple will make use of its strong presence in the smartphone market

As the above chart shows, Apple is a strong player in the smartphone operating system market, with about 42% of mobile subscribers in the U.S. using the iOS operating system. Although Android is the leader in this market, as it’s used by many smartphone makers, such as Samsung, Motorola, and HTC. BlackBerry (BBRY), Microsoft (MSFT), and Nokia (NOK) are small players in this market, with a share of each less than 4%. iOS is exclusive to Apple devices, so it has a strong presence in the U.S. smartphone market.

Apple knows how to disrupt established players

Although Apple doesn’t have the first mover advantage in the Internet radio market, it has a long history of disrupting established players with its own innovative products. The iPhone is a prime example. When Apple debuted the iPhone in 2007, much later than established players such as Motorola and BlackBerry, the iPhone immediately gained popularity, showing competitors a rough time. Apple has made iTunes Radio a seamless experience for iOS users. iTunes Radio is pre-loaded on millions of iOS devices, while all Apple users also have existing iTunes accounts. This gives a huge advantage to Apple, and Apple is bound to make inroads into the Internet radio space.

Recently, Samsung also launched a new free music application named Milk. What potential does Samsung have in the Internet radio market? To learn more, read the next article of this series.

Continue to Part 4

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