Apple Inc. (NASDAQ:AAPL) finally announced its long-awaited music streaming service to the world yesterday, and initial reports and the stock's movement suggest that the service was underwhelming for most. That's not to say that iPhone and iPad users won't use the service at the expense of Pandora, but the service remains largely unchanged from what was announced yesterday, so Pandora Media Inc (NYSE:P) and its employees can let out the breath that they've been holding while awaiting the unveiling.
Apple And Pandora Shares Rise Together
Shares of Apple Inc. (NASDAQ:AAPL) increased less than 1 percent to $440.23 at 9:59 a.m. in New York. Through yesterday, they were down 37 percent from a record in September. Pandora Media Inc (NYSE:P) rose 2.8 percent to $15.92, and was up 69 percent this year before today.
In its announcement yesterday, Apple Inc. (NASDAQ:AAPL) presented nothing shocking, different, or special. If for example, Apple Inc. (NASDAQ:AAPL) announced that they intended to release iTunes for the Android OS, things may have gone considerably differently. Android's mobile operating system, which now runs on 74 percent of smartphones, compared with Apple Inc. (NASDAQ:AAPL)’s 18 percent in the first quarter, according to research-firm Gartner Inc (NYSE:IT). IPhone sales climbed about 16 percent in the first quarter, lagging the smartphone market, which grew 43 percent.
When you limit yourself to 26 percent of the smartphone market Apple Inc. (NASDAQ:AAPL)'s ability to make a huge splash is severely limited if not crippled.
Analysts seem to agree wholeheartedly after Apple Inc. (NASDAQ:AAPL)'s announcement.
“In terms of features they talked about, it was a little underwhelming,” said Douglas Anmuth, an analyst at JPMorgan Securities LLC in New York. “They didn’t give a whole lot of details.”
“iTunes has expanded and extended its radio feature to match what other services have offered for years,” said Joe Kennedy, CEO of Pandora, which is based in Oakland, California. Pandora Media Inc (NYSE:P) has more than 200 million registered users, he added.
Additionally, because of the 200 million users already using Pandora they have already done the work, by listening, in order for them to have custom content that they enjoy delivered to them seamlessly. It's difficult to envision a wholesale movement of Pandora users who wish to go through that process again without the addition of so far non-existent added features.
For certain, Apple Inc. (NASDAQ:AAPL) can compete with Pandora Media Inc (NYSE:P) just not with anything they unveiled yesterday. Perhaps they are waiting for the roll-out of iOS 7 before really featuring iTunes Radio, time will tell.