is planning to expand its iTunes based radio service to overseas
markets, particularly in English-speaking territories such as the
United Kingdom, Canada and the Nordic countries by early 2014.
Apple expects to expand the service eventually to 100 countries,
although it did not specify any timeline.
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Apple released its music streaming service iRadio with its latest
iOS7 mobile operating system on Sep 18, which attracted more than
11 million unique listeners within a week's time. The iRadio
service is designed along the lines of
service, which allows users to create stations based on songs of
their choice (including Twitter trends), which they can also
share with friends.
Apple's move to international territories is aimed at expanding
its English language subscriber base, which will attract more
advertisers. The expansion of iRadio service will help Apple to
counter strong competition from domestic market leader Pandora as
well as other providers such as
Sirius XM (
, Spotify, Radio Inc. and
Apple is set to launch iRadio in Australia and New Zealand early
next year. However, Pandora already serves these countries based
on its partnerships with government entities.
According to Bloomberg, Apple's partnership with the likes of
Universal Music Group and other musical groups enables it to
easily launch the iRadio service in international markets. This
is a major competitive advantage for Apple as Pandora does not
have a similar kind of agreement with music publishers.
Although Apple is expected to face competition from local
providers, we believe its superior brand value and the
partnerships with music companies will help it to penetrate the
international markets at a much faster rate than its competitors
We also believe that Apple will eventually launch its iRadio
service in other languages such as Chinese and Portuguese, which
will enable it to penetrate the huge non-English speaking
customer base over the long term.
We note that Pandora enjoys a first mover advantage in the music
streaming industry in the U.S. Pandora's already popular service
(approximately 72.7 million users), driven by its effective
discovery engine and well-established infrastructure, will
provide significant competition to Apple in the near term.
However, international expansion will be a major growth catalyst
for Apple over the long term. In this regard, we believe that
along with Pandora, Google can be a major competitor of Apple's
iRadio in the international music streaming market going forward.
Currently, Apple has a Zacks Rank #2 (Buy).