Apple Inc. (AAPL) Needs to Lose or Open iTunes

In building a wall around iOS and iTunes, Apple Inc. (NASDAQ:AAPL) keeps its current users inside. Unfortunately, the nature of a competitive marketplace has cut into Apple’s iPhone dominance, and Spotify, Pandora, and Google Inc (NASDAQ:GOOG) are chipping away at iTunes as well.

In making iTunes (and iTunes Radio) available on Android/Windows Phones (Android of course owning the lion’s share of the market), Apple will in fact likely be drawing more users into contact with it than it loses by opening up iTunes, and I say that specifically because I believe that iTunes is currently an antiquated notion, given the alternative of the Spotify and Pandora streaming model. Unless you have a library of thousands of songs on iTunes, it’s more practical, especially in terms of future music purposes to move to a streaming service.

The reason Google Inc (NASDAQ:GOOG) gives away Android for free is it increases the likely-hood of its users interacting and using its other products. As Android expands its presence to developing markets, these up and coming consumers will likely be contributing to Google’s profits long into the future. This is brilliance and long-term vision on Google’s part. I’m hoping Apple follows suit before falling too far behind.

Actionable advice

That being said, I do believe that Tim Cook and Co are at least part of the way there in addressing this glaring problem.

I believe that Apple Inc. (NASDAQ:AAPL)’s valuation at 10 times earnings, and when backing out cash at 7 times earnings, makes it a buy, with much higher upside than down. As an Apple shareholder I just hope that, like Steve Jobs did with the iPod when he introduced the iPhone as a music player and phone combined, that they are willing to allow a current profit center to be cannibalized, so they don’t get left in the dust by the competition who embrace the new model.

The article Apple Needs to Lose or Open iTunes originally appeared on Fool.com and is written by Margie Nemcick-Cruz.

Margie Nemcick-Cruz owns shares of Apple and Google. The Motley Fool recommends Apple, Google, and Pandora Media (NYSE:P). The Motley Fool owns shares of Apple and Google. Margie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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