Apple came out swinging Monday, using its annual developers’ conference to defend its position in the digital music space with a new streaming service aimed at rivals such as Spotify, Pandora and Google.
The firm, which hasn’t released a major new product in more than six months, is combating the idea that it’s losing the ability to innovate after the death in 2011 of its co-founder and lead visionary, Steve Jobs. It unveiled several new software and hardware products, including a dramatic makeover of its mobile operating system, iOS 7, and announced a new desktop operating system, OS X Mavericks.
Executives, including Apple chief executive Tim Cook, took several jabs at competitors throughout the Worldwide Developers Conference, including poking fun at poor sales of Microsoft’s new operating system.
“Can’t innovate any more, my ass,” said Philip Schiller, Apple’s senior vice president for worldwide marketing, while showing off a new design for Apple’s Mac Pro desktop computer.
But the focus was an aggressive defense of the company’s reputation as a technology leader.
Analysts have been expecting Apple to build on the success of its iTunes music service with a streaming service for years. In the meantime, competitors moved in to scoop up listeners. Google last month announced a subscription music service, Google Play Music All Access.
The move allows Apple to protect its position in the U.S. digital music market, industry experts said. It currently has about 63 percent of the music download market, according to NPD Group.
“From an Apple perspective, this is a relatively defensive move,” said Stephen Beck, founder of the management consulting firm CG42. Beck, who works with technology clients, said that the move reflects Apple’s eagerness to keep iTunes users within its ecosystem rather than ceding them to Pandora or Spotify for streaming music.
Using the firm’s Music app, users will be able to create digital radio stations based on their favorite artists or songs. Listeners can then tweak the stations by indicating which songs they like and which they don’t. Users can also buy songs with one click, see what music is trending on Twitter and share songs with friends.
Apple’s new service will not require a subscription, though the free version of the service will include advertisements. Users who pay for the company’s $25 per year iTunes Match service, will be able to listen to iTunes Radio without commercials of any kind for less than comparable services from competitors.
Despite an almost aggressively optimistic tone from executives, Apple shares closed slightly down at $438.89 per share after rising as high as $449 Monday morning in anticipation of the company’s announcements.
Even the iTunes Radio news didn’t send the ripple through the industry that many had expected. Pandora, which had seen its stock dive multiple times on rumors of an Apple streaming service, closed up nearly 2.5 percent at $15.49 a share.
Still, while reaction to the service was muted, Apple is likely to quickly build an audience because the service will be automatically downloaded on millions of iPhones and iPads. “They’re only an update away from having a big install base,” Beck said.
Apple and Google have an advantage in the on-demand music market because they can easily integrate music purchases with the payment systems they use for their app stores, analysts said.
“The platform owner has the most to win in this case because they’ve already captured that user,” said John Donham, chief executive of the online music and talk radio company TuneIn. “Other services are many clicks away from getting users to their first song.”
Getting users may be the easy part for Apple, Donham said. But the company still must prove that it hasn’t lost its innovative touch to keep customers, he added. Apple has a mixed record when it comes to providing services, he noted, citing last year’s dismal reaction to Apple’s Maps app.
The iTunes Radio will be available this fall on a number of Apple devices, including the iPhone, iPad and Apple TV.
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