Apple and Pandora Business Models Comparison

Posted on | by Laureen
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The essence of a successful business is to be able to stay ahead in the market. Apple is a giant when it comes to its iTunes business model. But Pandora is proving to be a worthwhile competitor on a different platform. The paper would discuss the two companies’ SWOT analysis and make some assumptions.

SWOT Analysis of Apple

Strengths Weaknesses
  • It has a dominant position in the music industry.
  • Has been in the industry for over a decade since 2003.
  • It acquired Beats and its parent company for $3 billion. From the deal, Apple got the flashy Beats headphones, the fledgling Beats Music service, and the music industry connections of the company’s co-founder, producer-turned-executive Jimmy Iovine.
  • The company has enough cash to offer a free trial period.
  • Apple would allow the record companies and artists to make certain songs available free, just the same way they now use SoundCloud and YouTube to promote new songs.
  • Apple is well-experienced with music labels.
  • It has taken a lot of time before it closes deals with the three biggest global music companies, Vivendi SA’s Universal Music Group, Sony Corp.’s Sony Music.
  • Entertainment and Warner Music Group.
  • It is a new field. Beats is just a small company with a few hundreds of thousands of customers.
  • Apple’s iTunes Radio has not attracted the desired market.
Opportunities Threats
  • Apple is a giant and market leader in the tech industry.
  • Its iTunes is the biggest music retailer on the planet.
  • It would update its music app in a software update of its mobile operating system. It would also make the new services available on Google’s Android software.
  • The new Apple radio would benefit the users outside the U.S because theydo not have access to Pandora and could eventually become paying subscribers.
  • It is securing licensing deals with music companies.
  • Expectations are high for Apple’s launch.
  • Apple has already employed a couple of famous DJs and is negotiating with some artists.
  • Its sales dropped drastically and the cost to customers went up.
  • The company’s legacy is under threat.
  • Download sales have gone down because the youths have adopted the streaming, Google Inc.’s and YouTube services
  • The main competitors are Pandora, the 7-year-old Spotify, and Sirius XM Radio Inc.

SWOT Analysis of Pandora

Strengths Weaknesses
  • Pandora Media Inc. has existed for about 10 years.
  • Pandora’s number of active listeners and internet radio share has over the last one year.
  • It has a profitable advertising business.
  • Since the year 2000, the company has gained a massive following by streaming music based on similar artists or genres to users through its Music Genome Project.
  • It has strong partnerships with many automakers.
  • It is benefitting from mobile ads.
  • Pandora is only available in the U.S, Australia, and New Zealand.
  • It is running on losses. It has yet to make any profit.
  • Its costs increase with an increase in business.
Opportunities Threats
  • The government could make rules that are more favorable to companies like Pandora.
  • The availability of commercial time to exploit further.
  • Apple’s entry is an endorsement of its business model.
  • Apple has a long way to go in selling through its ad platform.
  • Shares of Pandora, which streams music online, went down when the Wall Street Journal reported that Apple would be venturing into the same business.
  • Apart from Apple, Pandora’s other competitors are Sirius XM Radio, Clear Channel and Spotify.

Apple would become more successful in the future. Pandora has a wavering clientele and shareholders. They are only with Pandora because there is no better alternative. Apple has a strong market and finances.

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