Apple Inc. (AAPL) Has to Do Something About iTunes

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The moment I read the headline - "Can Apple Do Us A Favor And Kill iTunes?" I was hooked. An intriguing subject, I wondered what that would do to Apple Inc. (NASDAQ: AAPL ) was Tim Cook to acquiesce.

Apple Inc. (AAPL) Faces Legal Battle in China Ahead of iPhone 8 Launch

Source: Shutterstock

Miller, hoping to watch the iTunes series Planet of the Apps (that's not a typo), went to the TV Shows section to buy it. No such luck. You can only watch the show's premiere episode there.

To buy the whole season, you have to go through Apple Music.

Why Is iTunes Still Around?

I have a Mac desktop, iPad and iPhone. You could call me a committed Apple user. I went to iTunes to see what he meant. I had even more trouble than he did (that says a lot about my tech savvy-ness) trying to find the entire season despite Miller's seemingly obvious directions.

With iTunes and the rest of Apple's services business becoming increasingly important for driving AAPL stock higher, having a completely dysfunctional iTunes app is actually incomprehensible.

The iTunes phenomenon first seemed to catch the eye of investors back in 2014. One article suggested this segment of Apple's business, if separate, would be the 130th largest company in the Fortune 500 .

Where does it rank today?

Well, in the first nine months of the year ended July 1, 2017, its services segment, which includes digital content from the iTunes Store, App Store and Apple Music, generated $21.5 billion , 19% higher than in the same period a year earlier.

On an annualized basis that's $28.7 billion, putting it smack dab inside the top 100 in the 98th position.

Can You See the Problem?

Not only is it the fastest-growing revenue stream for Apple, but it's also the second largest. So, yeah, I think the man has a point about iTunes.

"You can't duct tape a store onto a media library and expect it to work. Stacking a streaming music service on top of that mess only makes things worse …" Miller writes. "This is a real problem. In the industry, it's called technical debt. When technical debt gets so bad that it surfaces in the user experience, you have a problem."

Not being tech savvy - please don't send me emails reaming me out for having the nerve to talk about something I know nothing about -like a significant portion of the consumer-buying population, you want to deliver a product or service that meets the lowest common denominator. That's Business 101.

Miller's right about something else: Now that Apple's going to be investing $1 billion in TV and movie content, it needs to improve the user experience between all its digital content.

"Unlike Amazon and Netflix, Apple has the advantage of owning the operating system. They are the first point of contact for many of their competitor's users when they go online, or turn on their TV," writes Miller. "They should leverage this advantage by serving up content in a compelling way."

That's the Ticket

While Apple's at it, perhaps it could figure out a way for me to charge my iPhone from the back of my desktop without setting off all sorts of iTunes' bells and whistles. It's beyond irritating.

Don't get me wrong.

As stocks go, Apple is one of the better investments you can make especially now that it seems to be focusing more on creating jobs in America than saving taxes on its overseas cash.

Having said that, Apple is playing with fire if it doesn't address iTunes' deficiencies at some point within the next 12-24 months. You don't look a gift horse in the mouth.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

More From InvestorPlace

The post Apple Inc. (AAPL) Has to Do Something About iTunes appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers.

    Learn More