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Apple May Take A Historic Decision

March 22, 2014 | About:

Three years ago, when Android from Google (NASDAQ:GOOG)was taking baby steps towards becoming what it is today, Steve Jobs was asked if he would make Apple I-Tunes available on Android.

He said “We thought about whether we should do a music client for Android. We put iTunes on Windows in order to sell more iPods. But I don’t see an advantage of putting our own music app on Android, except to make Android users happy. And I don’t want to make Android users happy.”

Yet, circumstances may have forced the iPhone maker, Apple(NASDAQ:AAPL) to consider taking a decision, it has long avoided.

Downloads Slide

This year, U.S. digital album sales at Apple’s iTunes Music Store, are down 13 percent for the week ended March 9, and digital track sales are down 11 percent from last year, according to Nielsen SoundScan. iTunes store being the largest music retailer have already identified a trend where users are more likely to live stream their choice of music rather than download them.

Even as download sales have gone down, revenue from streaming services are on the up, according to a report released on March 18 by the Recording Industry Association of America (RIAA), showing that streaming services such as Spotify(SPTF), Pandora(NYSE:P) and YouTube generated $1.4 billion in subscription, advertising and licensing revenues in the U.S. last year, up 39 percent from 2012, while downloads revenue were down 3.2 percent to $2.9 billion.

Rear Guard action

To deal with this problem, Apple is set to explore a multi-pronged strategy to check the double-digit drops in iTunes downloads

The first of them would be to launch an on-demand streaming service that would rival Spotify and Beats Music. The streaming industry which has grown by 51% last year, clearly show a paradigm shift in the music industry, with users choosing streaming services’ all-you-can-listen model over downloading.

Apple is considering a range of strategies to boost up the iTunes Store. iTunes executive Robert Kondrk, has suggested creating exclusive album-release windows in which digital versions of the albums would go on sale even before the CD release.

However, the most exciting of them all are the news of Apple thinking about adding an iTunes App for Android phones, from Google which has been growing faster than the iPhone.

Departing thoughts

We can sit and criticize this move citing reasons like iPhone might lose its exclusivity and the possibility of users switching over to cheaper android phones. However, if we think rationally, even if iTunes is made available to Android, it won’t be done for free. Even the On-Demand subscription, like iTunes radio would be a good source of earning revenue.

If Apple remains rigid about the superiority of their platform and their phone – they’ll be ignoring a huge segment of people. It’s very similar to the iTunes to Windows switch. Just like putting iTunes on Windows meant more sales of iPods, putting an iTunes Radio On-Demand App on Android will mean more subscriptions. It will in no way make Apple look weak!

About the author:

The author holds a Management Degree in Finance and provides deep insights primarily in the fields of Telecom,Automobile,Technology and retail

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