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The search engine giant and its interminable battles

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From ad business to mobile payments, the search engine gaint has many fights to win

Recently Google Inc (NASDAQ:GOOGL), through its executive chairman Eric Schmidt, responded to Tim Cook’s, Apple Inc. (NASDAQ:AAPL) CEO, letter on privacy.  The letter distanced Apple from use of consumer data, a practice common with data mining companies such as those engaged in ad businesses.

The response could open a war of words on privacy between these two tech giants, but this not the only war that the search engine giant is fighting. Since the company is engaged in different business niches, the company has made so many rivals and thus receiving blows from all directions. Here are Google’s current battles and how it is handling each an every one of them:

Google vs. Facebook –ad business

Over one and a half years ago, Facebook Inc (NASDAQ: FB) bought Microsoft Corp’s (NASADQ: MSFT) Atlas ad measurement and serving platform. The social media network has now revamped this app and is soon launching it to help its advertisers measure the performance of the ads they post on the social network, its apps or third party sites. And with Facebook’s mobile ads performing exceptionally well, Google has every reason to worry of its DoubleClick display ad unit.

Google is not sleeping on the job, however. The company acquired ad measurement platform Adometry and has been upgrading its system to perform better by being able to track offline and cross-device activity. Besides this, the company launched an app install ad service for AdWords search ad. This will definitely help it secure its position as the number one online advertiser.

Google vs. Samsung: the entry of Tizen OS

The South Korean electronincs company Samsung has been gradually developing its OS known as Tizen. The system is not only meant for smartphones, but also tablets and home appliances. This bad news to Google as Samsung has been the real force behind Android dominance in the smartphone market.

To replace Samsung, Google has partnered with HTC to make its next 9-inch Nexus tablets. Both Google and HTC are poised to benefit from this deal. The search engine giant will be reducing reliance on Samsung through supplier diversification, while the Chinese gadget maker will benefit from the Nexus effect.

Payment Service: Google VS. Apple

On Sept 9 Apple unveiled its iPhone 6, and also making its debut was Apple Pay, a mobile payment solution. While Google was a first mover in the mobile payment market, the search giant failed to make any impact. But Apple has been able to convince financial industry players such as merchants, banks and insurers to accept its mobile payment service. Already some top-tier merchants are on-board including McDonald’s, Whole Foods, Duane Reade, Subway, Macy’s, Bloomingdale’s, Staples and Disney.

In response to Apple’s onslaught on e-Payments solutions, Google is rumoured to be working with eBay Inc’s (NASDAQ: EBAY) subsidiary PayPal. This has even prompted rumours that Google might as well acquire eBay or its subsidiary.  Whatever the case, partnership with PayPal, which has gained global traction as an online payment network, will be a perfect response. Also the availability of iOS 8 mobile payment solution has created a gap for a similar solution for android. Actually, industry players will be quick to embrace an android mobile payment solution as it the largest mobile community.

Conclusion

Google has ventured in virtually every business that relates to the internet. This has created different angles for competition as each player scramble for the open market. While the search giant has many battles to fight, it has nothing to fear as it has a formidable defence thanks to huge amount of money on its coffers.

Apple introduce new encryption iOS 8 Software

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The new iOS 8 software will be able to encrypt user’s data by default

There have been several cases where Android users have lost their private information through hacking and other illegal means but this will soon be a thing of the past. Google and Apple are set to introduce a new mobile operating system that will be able to protect users’ private information through default encryption. This will make it impossible for anyone to access user’s information including Apple Company itself. Therefore even incidences of users’ private information being given to law enforcing authorities without their consent will no longer be there.

All mobile devices running the new iOS 8 software will be encrypted by default thus assuring protection to user’s data. Google and Apple have offered the encryption for quite some time now although many of the Android users were not aware of it and therefore were not running it on their devices.

Mr. Tim Cook, Apple’s boss, through an online message said that the company’s main commitment is to provide their clients with the greatest user experience without compromising their privacy. The new software will assure users their privacy as they use their mobile devices.

Clarification

Mr. Cook also emphasized that the new iOS 8 software is meant to improve customers’ privacy only and Apple will not use its clients’ private information to disseminate any advertisement information to them from Google or any other partners. He said that Apple does not use information stored by clients on their iPhone or iCloud to advertise to them nor do they read any messages or emails stores on users’ devices. He also said that Apple has a specific function for business advertisement called iAd, which users can disable.

Google announced their support on the default encryption saying that the encryption had been offered by Android for the past three years although it was not on default mode. Since the new encryption will be by default, Android users will not be required to turn it on.

Apple and Google are now following the footsteps of Blackberry which has offered default data encryption for quite some time. The move by the two companies to launch the new iOS 8 software comes following the leakage of some nude photos of celebrities over the internet in earlier September. Among those affected was Jennifer Lawrence and the leakage was attributed to iCloud storage services offered by Apple.

Law Enforcing Authorities   

With the new iOS 8 software, most US companies will also be secured against their private information being handed over to law enforcing authorities without their consent. Various US firms in technology industry including Google, Facebook, Microsoft, Dropbox and Twitter have been fighting against their private information being handed over to law enforcing authorities thus threatening their privacy.

David Emm, a researcher at Kaspersky Lab, told BBC that default encryption is more about privacy rather than protection. He said that with automatic encryption, it will be difficult for users’ private information to be accessed by third parties. He also clarified that the protection will only apply to data on Apple or Android devices, but any information stored on iCloud could still be accessed by law enforcing authorities.

Android Wear takes on the Apple iWatch

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Google to launch Moto 360 smartwatch

Google (NASDAQ:GOOG, GOOGL) is expected to release its Moto 360 smartwatch ahead of Apple’s (NASDAQ:AAPL) September 9th event. The android wear version has notable upgrades, including its ability to perform a number of functions independently, without necessarily being linked to an Android smartphone. The search company will be seeking to seize the moment in the lucrative wearable market with huge growth potential.

About Android Wear

Android wear is a modified version of Android operating system designed for the wearable, such as the smartwatch. The platform was launched at Google’s June I/O developer conference.

Earlier, the wearable market had problems with apps as developers had lacked a common platform to build them on. But now with Google’s android wear, apps in Google Play can be upgrade to support Android wear. According to the company’s engineering director for Android Wear David Singleton already thousands of apps on Google Play support Android Wear.

The wearable market has become the next battle ground for tech giants, with Apple rumoured to launch its iWatch perhaps in its next week’s event. The iPhone maker is known for its exquisite and elegant products, and its wearable will definitely be well received.

Banking on the first mover advantage

The iPhone maker is expected to unveil its iPhone 6 in a much waited event that might also see it unveil its first wearable product, the iWatch. However, if the company goes by its tradition of giving each of its products enough shinning moment, then it is likely that the market may have to wait a while longer for the wearable device from Apple. And this is exactly what the King of internet search business is counting on.

Google is seeking to benefit from the first mover advantage with its Moto 360 smartwatch as Apple still procrastinate. While this may not be possible as the iWatch may hit the market as early as next week, there is still a possibility that the iPhone maker may yet wait a little longer to launch its iWatch.

Capabilities of the new wearable

There are already existing Android-based wearable, but these devices have limited capabilities if not paired with other devices Smartphone or tablets. However, the yet to unveiled version is expected to improve on this. Such functions include:

  • Moto 360 GPS capabilities can also use geo-location data to track their user’s fitness sessions.
  • Comes with a set of Bluetooth headphones
  • Can store music and thus the user can go for a run and leave his phone at home, but still listen to music through the headphones.

Generally, Google has expanded non-paired functionalities of its new device. The company further plans to offer frequent updates to Android Wear extending the platforms capabilities.

Conclusion

The new Android Wear version is expected to give developers a platform that make easier to develop apps. This will further position Google to continue perform in businesses outside its core search business. While next week’s Apple’s event may put pressure on Google stock, the stock is worth holding on.

 

Apple Payment Ecosystem on the Horizon

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Will Apple Launch a Payment Ecosystem on November 9 Event?

It is increasingly becoming evident that Apple Inc. (NASDAQ: AAPL) is going to venture into mobile payment ecosystem. The past few weeks has seen a number of sources claim that the much awaited iPhone 6 will have a mobile wallet or something of similar kind. So as investors and other stakeholders look forward to the September 9th event, the question they ask is will Apple unveil its payment ecosystem?

Apple has a glut of opportunities resulting from its massive credit card data. The data includes high user engagement metrics which positions the company strategically to venture into mobile payments. In fact, sometimes back Sanford Bernstein analysts suggested that the iPhone maker could pose a real challenge to eBay Inc’s (NASDAQ:EBAY) subsidiary PayPal.

Apple’s rumoured mobile Payment System

The rumours surrounding the possible launch of a payment system together with the new iPhone is based on a number of clues. They include:

Printed Circuit Board (PCB)

Experts have examined the leaked photos of the iPhone 6 PCB and have agreed that Near Field Communication Chip (NFC) is going to be used in iPhone 6. It is possible that the chip may also be used in the iWatch. NFC is combined with a host of other features including a larger RAM and a faster Wi-Fi component. These traits are in line with a  combination of patents associated with structures needed for a secure mobile payment ecosystem.

Apple recent Partnership deals

Bloomberg reported that Visa (NYSE:V), MasterCard (NYSE:MA) and American Express (NYSE:AXP) have entered an agreement with Apple an iPhone wallet deal that will be unveiled on September 9th.

What Mobile Payments means for Apple

While Google Inc’s (NASDAQ: GOOGL, GOOG) android has dominated the Smartphone market, the iPhone still commands the lead in the U.S. market. If Apple is introducing mobile payment service as expected, it is going to sweep the U.S. market by storm. This is according to Creative Strategies LLC’s analyst Ben Bajarin. He was responding to Bloomberg about Apple’s rumoured venture.

There are other players who have tried to introduce mobile payment system, though none has really seen the light.  However, Apple is known for its ingenuity and I’m certain that if its mobile wallet will take off, setting grounds for more players to join.

Apple has about 800 million global iTunes accounts, and it banks on this if indeed it is going to create its own payment ecosystem. PayPal has just over 152 million registered accounts but processed $180 billion worth of payments in 2013 generating $6.6 billion in revenues. If Apple will be turn a good number of its iTunes account holders to the ecosystem’s customers, the system is likely to pick up quickly. While this will not be easy, its rumoured partnerships with plastic card companies will help it in this quest.

Conclusion

It seems Apple has heeded to the mounting pressure on it to monetize its data by venturing into the payment market. In the past few weeks, there has been piling clues that September 9 may see iPhone users get a new payment ecosystem. Though it is not clear how exactly the iPhone maker is planning to do this, investing in mobile payment could be a real game changer.

Apple and IBM seal a Landmark Deal

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Former Sworn enemies to Work together

Tim Cook, Virginia Rometty, IBM, Apple

Tim Cook and Virginia Rometty – picture courtesy of Networkworld.com

After decades of rivalry, Apple Inc. (NASDAQ: AAPL) and International Business Machines (NYSE: IBM) have decided to work together. A deal was announced on Tuesday that will see IBM create simple business apps for the iOS platform and sell iPhones and iPads to its customers.

The news that the two tech giants  have agreed to work together has caught many by surprise as no one would have imagine of such a case in the reigns of the Apple and tech icon Steve Jobs. These two companies have been rivals for over 3 decades. However, the demise of Steve Jobs and subsequent entry of Tim Cook, a former employee of IBM, has brought about policy change ensuing to this agreement.

This agreement was jointly announced by Apple Chief Executive Tim Cook and IBM CEO Virginia Rometty, nevertheless the two executives refused comment on the financial terms. So what is in this agreement, and what is in for both of these tech giants?

Apple’s Gains

The company will benefit from IBM’s computing services experience, which includes areas such as security, device and big-data management, data analytics and more. The partnership will also allow Apple to utilize the over 100,000 IBM consultants/sales workers. They,IBM will provide on-site support and service to Apple.

The iPhone-maker will also be linked to over 2,000 firms that are in business relationship with IBM. This could boost both sales of iPads and iPhones, as Apple has primarily dominated the consumer market as compared to the corporate markets.

IBM’s Gains

Over the past eight quarters, Big Blue has seen decline in its year-over –year revenues. However, it has not fully exploited the world of mobile devices. The tech company will be banking on Apple’s loyal customer base to aid in transition of its business software business to mobile devices. By convincing the business world to use Apple products, (primarily the iPhone and iPad), in their day to day operations, the company will be creating a client base for its own mobile device business software.

The two Tech Companies are Developing New Apps

As announced, the two companies have now joined hands and are making over 100 easy-to-use business apps for various industries. It is expected that the first collection of these will be available as soon as Apple launches its new mobile platform, iOS 8.

According to Big Blue boss Ms. Rometty, who has worked in her company for decades, this partnership marks the dawn of a new era and the end to poor use of smartphones as business tools. She said businesses only use Smartphone for mail and calendar. This deal will open a floodgate of new, serious business apps for the iPhone and iPad.

About Apple and IBM Rivalry

In the early 80s, both companies were producers of personal computers. The two companies were at throats of each other, and the feud can be remembered by the much publicized commercial dubbed “1984” which directly attacks IBM as uncreative firm that boring machines for the business world.

The competition ended almost a decade ago when Chinese giant Lenovo Group acquired IBM’s personal-computer unit. IBM has since positioned itself a software and computer-services provider. Apple on the other hand still produces personal PCs but has mobile devises as its main product lines. So this arrangement has come in later than it should have!

App Store Pays More Money than Play Store

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App Store Pays More Money than Play Store

iOS, App Store

Last week at the annual Google Inc.’s (NASDAQ: GOOG) I/O conference, it was revealed that iTunes app store developers take home 4 times the amount Google Play Store developers take. Google Senior Vice- President Sundar Pichai told developers that the search engine giant paid android developers more than $5 billion over the 12 months. However how huge the amount may seem, it is merely half of what Apple is approximated to have paid its iOS developers.

In 2013 alone, Apple Inc. (NASDAQ: AAPL) shared more than $7 billion to app developers, and this year the company is expected to pay $12 billion or more to its developers. This is due to the fact that Apple products have a loyal customer base among the affluent. Thus, its customers spend more on applications.

Google Admits iOS Developers Earns More

Google admitted to its developers that their iOS counterparts earn more; nevertheless, android platform is slowly catching up. As we speak, there are about one billion active android users, while iOS users are slightly less than half of this, in fact 470 million users to be precise.

Apple has monetized its loyal fans better than Google, or perhaps the iOS platform users are much generous and willing to spend more on apps. If this trend is to continue, many app developers will continue finding Apple much attractive.

Despite the fact that android phones have outnumbered iphones in the market, the latter still dominates the U.S. and Canadian market. According to the data by Chitika, iOS 7 devices grossly dominate in two largest North American countries.

Mobile web traffic from iPhones stood at 84.3% in the U.S. and Canada as of February this year. The iPad, which also uses the iOS platform, is responsible for about 79% of the web traffic. This follows that Apple has monopolize the large part of the North American continent. The huge monopoly of the web traffic is partly the reason why iOS developers continue to take home more money than their android counterparts.

Apple is also targeting the Chinese market. Its yet to be released iphones with large screens are in line with the Chinese smartphone market demands. Android phones have enjoyed a good run in China so far because of their large displays which are preferred by the Chinese population.  Forrester Research data show that 40% of the android mobile devices sold this year had displays 5-inches or more. By producing large iphones, Apple will be eliminating the one big advantage that android users brag about. More iphone consumers mean more money for Apple, and more demand of iOS apps!

Conclusion

If the big spenders continue with their loyalty to the Apple brand, app store developers are still going to continue to mint more money than Google Play developers.  It has been two years and Apple has still kept the distance, the disparity in app sales.  Apple has for a long time targeted big spending customers, and this has and will for a long time be its greatest strength. If the trend continues, many play developers are likely to join the app store bandwagon.

Bigger iPhone Models in the Pipeline

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The iPhone Maker is Making two new Models with Larger Displays

bigger iphones, iPhone models,Do you own an iPhone? Do you like the size of your phone or would you prefer a larger one? Bloomberg is reporting that Apple (Nasdaq:AAPL)will begin mass production of the largest iPhones ever next month. Without mentioning names of its source, the site claims that the people from the inside say this is in response to increased competition in the Smartphone market. So could big iPhone models be in the pipeline?

According to the leaking reports, which are also captured by The Guardian, Apple is working on two iPhone models with larger screens courtesy of its Chinese supply chain. One device is said to have a 4.7-inch screen, knocking out the current screen 4- inch size of iPhone 5S. The other device, also in the pipeline, is much larger and is expected to have 5.5-inch display. Both the two iPhone models are to be made available in the market in about two months.

Why Bigger iPhones?

The competition in the Smartphone market is increasing becoming more aggressive. Already other players such as Samsung Electronics and HTC Corp. (TPE: 2498) have introduced their models with larger displays.

In China, many consumers prefer smartphones with large screens. As indicated by statistics from Forrester Research, 40% of the Google Inc.’s Android mobile devices sold in 2014 had displays of at least 5-inches. So Apple is in order to introduce larger screen displays, if it wants to put the pressure on Google Android’s largest phone marker, Samsung.

The new iPhone models will help the company compete with the South Korean electronics giant, whose Galaxy Note 3 is about 5.7-inch  in display. The smaller of the two iPhone models, 4.7-inch screen, is about the same size as Samsung Galaxy S III released in 2012, or Amazon.com, Inc.’s (NASDAQ:AMZN)flagship – new kid in the bloc – the Fire Phone.

Other Features of the new iPhone Models

In addition to the change in size, the new models will be rounder and thinner compared to the previous models. There are also unconfirmed reports that the new models may also include:

  • 2.5-dimension curved glass
  • Enhanced sensors to detect different pressure levels, making the screen detect light and heavy touches.
  • A new OS (iOS 8)

New Powering Software: iOS 8

The new, yet to debut, iOS 8, has a host of new features for both the iPhone and iPad. The capabilities of the new software ranges from enabling users to use their mobile devices as remote to their home locks and lighting system, to monitoring their health.

Features of the new iOS 8 include:

  • Adaptive display that allows programs to fit in varying screen sizes.
  • Swipe functionally borrowed from iOS 7.

The iOS 8 is expected to debut alongside the new iPhone models in September.

Conclusion

iPhone is contributing more than 70% of Apple’s revenues and the company’s Chief Executive Officer Tim Cook must work through thick and thin to maintain  iPhone’s positive sales growth. The new iPhone models in the pipeline might help him achieve this, but there are reported complexities in their production. All in all, we expect Apple to sail through smoothly and the models will be available in retail stores come September!

Apple Confirms It is Buying Beats Electronics

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The much publicized Apple beats deal is now official. Apple Inc. (Nasdaq:AAPL) has said it is buying Dr Dre’s Beats Electronics for $3 billion. The deal, which has drawn criticism and praise alike, will see Jimmy Iovine and rapper Dr. Dre work under Apple’s internet services segment headed by Executive Officer Eddy Cue.

The beats deal has been tipped to help Apple regain its music mojo. The company, which revolutionized digital music through iTunes, has been struggling in subscription music – a service that is slowly replacing digital music downloads. The high-end Smartphone maker is now set to pile pressure on the industry leaders, Pandora and Spotify.

The executives from both Beats and Apple said that the former will retain its brand and remain separate from Apple. Beats’ high-end headphones will continue to be sold in Apple stores, alongside Apple products.

Beats Streaming Music and iTunes

Some people may feel that keeping both Beats’ streaming music service and iTunes digital music store and streaming radio service is like duplication of projects. However, the two brands are completely different and will be extremely difficult to merge. So Apple has offered to play it safe by letting Beats continue operating independently.

Apple will be happy to have the legendary music producer Jimmy Iovine on their side. Since the demise of Steve Jobs, the iPad maker has gradually been losing touch with the major labels following the declining sales of albums and individual songs in iTunes music store. There is hope among shareholders and analysts that bringing in a music industry insider will help the company recapture the lost grounds.

According to Apple’s CEO, Tim Cook, Dr. Dre and Iovine are an incredible asset that his company is lucky to find. And while many people are concerned with the $3 billion price tag, Tim Cook is happy to have gotten a music streaming service that allows users to create playlist alongside a rare blend of professionals. The Apple boss praised the duo and was quoted by Forbes as follows:

“These guys are really unique…It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”

Perhaps what he is not saying is that the talent the pair has is what iTunes was missing. And because there was no time to breed such talent from inside, so he had to acquire it through the beats deal.

Beats Deal – Apple’s Biggest Acquisition Ever

Apple and Beats have agreed the terms of acquisition as $2.6 billion will be paid in cash whereas the remaining $400 million, which is only $4 million shy of NeXT acquisition in 1996, will be in stock. Until Beats deal came around, Apple has avoided big buyouts, but possibly those days may be all gone. This is Apple under Tim Cook, not Steve Jobs! However, poaching talent has been one area where Silicon Valley firms outdo each other, and Apple just got Iovine on their side!

Beats deal is yet to be officially concluded and it expected to be finalized in this fourth quarter. This will be Apple’s biggest acquisition ever, dwarfing the NeXT buyout that brought back Jobs to “his” company.

Apple vs Samsung: $120 Million not Enough!

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Apple Wants 9 Samsung’s Android Phones Banned for Copyright Infringement

Apple vs Samsung, SmartphoneApple Inc. (Nasdaq:AAPL) has moved to court seeking ban on sale of some of Samsung Electronics Co. Ltd’s (KRX: 005935) Android phones in a redo of Apple vs Samsung legal suit. The phones, Apple say, have infringed three of its patents. This comes in just over a week after the iPhone maker had signed a truce with Google Inc (NASDAQ:GOOG), which owns the Android platform, to drop lawsuits between them and work together in some areas.

On 2nd May, court awarded Apple $120 million out of the $2.2 billion it sought from the South Korean electronics giant for infringing its patent rights. The latter was found guilty infringing three out of five patents of which it used in Google’s Android operating system. The Apple vs Samsung patent issue revolve around iOS user-interface design used in iPad and iPhones.

Again, a few days ago Apple identified nine devices it wants barred in the U.S. as shown in a court filing with the U.S. District Judge Lucy Koh in San Jose, California.

Apple vs Samsung: Battle for Control of the Smartphone Market

It will be remembered that Koh presided over the first Apple vs Samsung U.S. legal battle between the two Smartphone makers. However, Apple which now trails Samsung in terms of shipment of Smartphones, will be kin to see how the judge handles the case given that she had twice rejected the company’s request. The iPhone maker believes that a sales ban would be more rewarding than being paid for monetary damages. Already the two companies have been engrossed in legal battles in at least four continents dating back to 2011.

The Apple vs Samsung legal battles are often associated with fight for dominance in the Smartphone market valued at approximately $338.2 billion. While the two are not the only players in the market, they control a chunk of it, with Samsung leading with 31% from 32% it held a year earlier, and Apple controlling about 15% , 3 % down from what it held earlier.

The market smaller players are from China and they include Huawei Technologies Co. and Xiaomi Corp. The two Chinese smartphone makers are producing feature packed Android phones and selling them at a cheaper price. They have markets in emerging markets in Asia and Africa, and this is why they are eating into the shares held by both Samsung and Apple.

Samsung Devices Apple wants Banned

According to the court filing, Apple wants nine Samsung Android phones banned in the U.S. market. They are:

  • the Admire
  • Galaxy Nexus
  • Galaxy Note
  • Galaxy Note 2
  • Galaxy S2
  • Galaxy S2 Epic 4G Touch
  • Galaxy S2 Skyrocket
  • Galaxy S3
  • Galaxy Stratosphere

Conclusion

In announcing their truce with Google, Apple spokeswoman was very clear on Apple’s patent litigation against Samsung. The truce, she said, was having no bearing in the iPhone maker’s case against Samsung. Nevertheless, it is important to note that Samsung is the leading user of the Google’s Android operating system.

Samsung’s newest flagship products, the Galaxy S4 and S5, have not been involved in the legal tussles and the company is counting on them in the battle for control of the ever swelling Smartphone market. Galaxy S5 went on sale March 27 in South Korea, but has tumbled following poor ratings. Tech experts, tech journalists and analysts are set for another Apple vs Samsung and waiting to see what it will bring, as the battle for the smartphone market takes centre stage.

Streaming Subscription may Boost Apple

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Apple may Reinvent with Music Streaming Subscription

streaming subscription, apple. itunes

Apple store China

Anytime soon, Apple Inc. (Nasdaq:AAPL) may announce that it has acquired Beats Electronics founded by Jimmy Iovine and renowned rapper Dr Dre. The two companies are rumoured to have reached a deal and all that is remaining is official proclamation. Beats is a high-end headphone maker and music streaming service provider.  It is obvious that Apple is most interested in its music services!

But why would Apple be interested in another company’s music services when it has its own digital music store and a streaming radio service? There may be a lot beneath the carpet, but primarily the potential of music streaming subscription business may be the primary reason.

Potential of Music Streaming Subscription

According to data from the International Federation of the Phonographic Industry, streaming subscriptions soured 51% in 2013, contributing to $1.1 billion in the gross $15 billion spent on music. In contrast, digital downloads dipped 2.1%.

The data also show that streaming services fetches higher revenues that digital music downloads. An average customer spend $25 – $35 annually on music downloads, while such a subscriber spend at least $9 a month.

And since the labels royalties are merely a fraction of a cent per music streamed, the revenues in streaming subscription per user is higher than per user digital sales.

So why Choose Beats?

Beats electronic is renowned for its hardware, though the potential of its music streaming business cannot be overlooked. In its initial weeks of inception in January, beats’ music streaming service signed up over thousand followers a day.

When Apple acquires beats, it will be taking the ownership of the high-margin headphone business together with a music streaming service that has been developed by music industry insiders. In addition, the company will be bringing in top players in the music industry like the legendary music producer Jimmy Iovine. You may well say that Tim Cook’s company may have nipped its competition in the bud.

Others…

Prevent Over Dependency on iPhone

“Beats by Dre”, as the young Apple’s acquisition is widely known, will cost the iPhone maker up to $3.2 billion. And though Apple has such a huge amount of money on the coffers, it is now depending on its flagship product – the iPhone – more than ever!

Revenues from iPad are slowing down, the impact of stiff competition fromstreaming Subscription is starting to show signs in its music store and iPod is no longer nascent! Only iPhone is doing well with a double digit revenue growth, and now is contributing about 75% of the company’s total revenues.

While iPhone sales growth and dominance is a good thing, depending on a single product line is dangerous. And with the kind of competition the iPhone is subjected to by Android phone makers, there is need for Apple to reinvent its other businesses if its revenue is to keep growing, and music streaming Subscription may be the answer.

Compete with Streaming Subscription early adopters

Apple’s music business (iTunes) is slowly losing the love of record labels as the business of digital music downloads is slowly fading. Streaming subscriptions is the current trend in the music industry. iTunes radio, Apple’s 8 month old answer to this development, is also faltering. Therefore, there is every need for the company to re-strategise to compete with early adopters like Spotify and Pandora Media Inc. Conceivably, beats electronics may be it ripostes as it is already in music streaming subscription business and it will hit the ground running!