SAN FRANCISCO, June 9, 2015 – At the opening of Apple’s annual World Wide Developers Conference here Monday, Apple dropped a long-expected product bomb on streaming music services like Spotify and Pandora, announcing the rollout of its “Apple Music” offering.
Apple’s new streaming subscription product, which launches officially on June 30, will cost individual users $9.99 a month. Alternatively, $14.99 will buy users a family plan that that will require the use of “iCloud Family Sharing” after the conclusion of a 3-month trial period.
Taking a page out of Microsoft’s old playbook, Apple Music will initially be available only on Apple platforms. Android users will have to wait until sometime this fall to access the new service.
Jimmy Iovine, one of Beats’ founders and now with Apple, explained the move this way: “Online music has become a complicated mess of apps, services and websites. Apple Music brings the best features together for an experience every music lover will appreciate.” That will likely be the case, once the inevitable new product hiccups fade into the background.
When Apple made its surprise $3 billion acquisition last year of Beats Music, including that small company’s well-regarded headphone product and its own streaming music service, analysts quickly concluded that the real prize in the transaction was the latter service.
Beats Music provided an instant online platform that Apple could mold into its own image and likeness, shortening the company’s path toward making a competitive – if late – entry in the music streaming space.
The increasing popularity and ease of use of subscription based, unlimited streaming models for distributing music had begun to seriously cramp the bottom line of Apple’s more mature iTunes point-of-sale music purchase service.
Now, Apple Music gets the personal computer and consumer products giant back into the game it arguably started years ago with the launch of it iPod music storage and playback device.
Apple’s new, highly-personalized, highly-configurable streaming music service will also offer user-customizable playlists, one or more “radio stations,” personality interviews and shows, and the ability for performers to upload their own audio and video files.
In other company news, Apple has already announced the successor to Yosemite, the current iteration of OS X for the Mac. In keeping with the current California motif, Apple said the next version of this Unix-based OS, dubbed “El Capitan,” will be available sometime this fall but provided few details other than improvements in search capabilities.
watchOS, the Apple Watch operating system will also get an update that will integrate that product more tightly with the rest of Apple’s product line while giving developers an easier path to support the product.
iOS 9 for iPhones and iPads will also improve the user experience, particularly by making the Siri search system more user friendly and proactive. The new OS will also make multitasking capabilities available for the first time to iPad users while adding a virtual trackpad feature as well.
On the Apple Pay front, Apple announced it’s working together with Square to develop a device that will ease the path for small businesses wishing to adopt the new pay service. Apple Pay will also be available in the UK beginning in July.
More announcements are slated to come during this year’s conference. But Apple Music, at least at the moment, would appear to be the company’s “next big thing.”
Today’s Trading Tips
As is generally the case on Wall Street, big Apple product announcements are always an excuse for some traders to dump the stock, and Monday was no exception. Apple shares (symbol: AAPL) were off about one percent and are down another one-plus percent today. This predictable patch of action is often a good time to pick up Apple shares. But then again, in 2015, nothing at all appears to be close to a sure thing.
Pandora Media shares (P) have fared far worse thus far, down nearly six percent between Monday’s close and Tuesday morning trading action.
The U.S. stock market itself has been caught for weeks now in a nasty, churning pattern with an over all negative bias, and Tuesday morning’s trading is no exception. The Dow and S&P 500 are nominally up as of 11 a.m. EDT, while the tech-heavy NASDAQ, where Apple is a big influence, is down modestly along with many tech stocks.
The market’s trend will likely be choppy-to-down all summer with Greek and Fed fear dominating action on declining volume. However, the charts tell us we could be in for at least a small oversold bounce some time this week. That might be a good chance to exit weak positions or even take some profits off the table if you have any.
That’s what we plan to do. We have already exited our small position in Forest City (FCE/A), a developer transforming into a REIT. We acquired the shares in a secondary that company issued last month, and sold them this morning for a mediocre profit—which, at the end of the day, is better than no profit at all.