For a few quarters, Apple Inc. (NSDQ:AAPL) investors had focused on the company’s main businesses, from the iPhone cash machine to other emerging businesses like Apple Pay, Apple Music, and Apple Watch. In an earlier article, I described that change as an interim period until Apple will launch its next cash machine– the autonomous/electric Apple Car. However, for now, the company is trying to develop new markets and services to offset the sales decline of its Apple iPhone.
The Apple Watch and other new consumer electronic devices from Apple did not quite take off, so investors highlighted the services segment as the one to drive Apple’s future growth. There are two primary services that comprise that segment: Apple Pay and Apple Music. On the Apple Pay front, the company made tremendous progress, expanding its presence in Asia and Europe and launching Apple Pay for Safari, which enables web transactions to compete directly with PayPal. Apple Pay is slowly evolving as a major global e-payments player that could challenge PayPal and AliPay’s dominance worldwide and generate substantial revenues in the future.
After the impressive progress made with Apple Pay, the company turned to strengthen its second primary service – Apple Music. The music-streaming market has many similar characteristics to the e-payments market: both of them include dozens of players in a very crowded market, with one or two distinct leaders and many newcomers trying to generate significant market share to monetize the market’s expected growth. In the e-payments market, Apple targeted PayPal and AliPay, and in the music streaming market, Apple is targeting Pandora (P) and Spotify.
Spotify is currently the world’s largest paid music-streaming service, with more than 30 million paying users, compared with Apple Music’s 13 million paying users. However, Apple has one huge advantage over Spotify, which is the company’s extensive, worldwide ecosystem that is tightly controlled by the company, and while Apple can use that ecosystem to offer and promote its music services, other services which are mainly mobile-based, like Spotify, Tidal, etc., are dependent on Apple to be available for iOS customers.
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