Who Is Samsung Trying to Kill Today?
Shares of online music service Pandora Media (NYS: P) plunged as much as 9.4% this morning. The culprit? Collateral damage from a move that was never even aimed at Pandora.
Korean tech giant Samsung just filled up European store shelves with its new flagship smartphone, the Galaxy S III. You'd think that another high-end smartphone would only help digital music specialists like Pandora, but then you're wrong on two counts:
The more consumers use Pandora, the more money the company is bound to lose. That's especially true for smartphone users, who contribute much less cash to Pandora's coffers than desktop users do.
The new Galaxy comes with a brand-new music service, dubbed Samsung Music Hub. It's aimed squarely at the heart of Apple's (NAS: AAPL) iTunes, with comparable pricing and content selection and arguably a slicker interface. But it's also fresh competition for rivals like Pandora and Spotify.
Samsung pulls a lot of weight in the smartphone field. The Galaxy series utterly dominates Android sales and makes Sammy a legitimate challenger to Apple's iPhone line. When a big name like that presents a new default music app, third-party apps have plenty of reason to chew their fingernails.
Pandora's plunge does not mean that Samsung is going to kill the company in one shot. It does, however, underscore how jumpy the stock can be. Share prices have bounced between $8 and $26 since last summer's IPO. With so many threats circling the company, including a totally unworkable revenue model, I can't blame investors for having itchy trigger fingers.
That being said, I'm surprised that Apple owners aren't reacting to Samsung's attack. The Music Hub service matches iTunes feature for feature, but adds a Spotify-like all-you-can-eat monthly subscription option that Apple never had. Yes, iTunes Match lets you stream your iTunes library anywhere you go, but Sammy even matches that convenient feature and lowballs Apple on pricing. Samsung's music-file scanner comes at no extra cost and a generous 100 gigabytes of cloud storage. How will Apple fight back? Will Tim Cook react at all?
Pull up a chair and grab some popcorn. The digital music wars are never boring.
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