Innovation at Apple Inc. (AAPL): Fact or Fiction?

Pandora’s box

Pandora’s service basically allows users to generate music playlists to their own liking. Users can select artists that best fit with their taste in music, and then the service picks more music that is similar to the original choice. Pandora Media Inc (NYSE:P) makes its revenue from online advertising sales and is free for many users. As with other social media companies, however, a lot of the growth is shifting to mobile ads. Pandora reported mobile revenue growth of 111% to $80 million in the fourth quarter.

Apple Inc. (NASDAQ:AAPL) would have to compete against Pandora, and all other music services. We know that Apple has the cash to throw into this online radio sector, with on-hand cash totaling $141 billion. Investors have to wonder if this is the track that will make Apple successful in the future as an innovator, though. What I think a lot of investors would like to see is acquisitions of technology companies that complement Apple’s strategy. The company could then use those acquisitions to innovate new ideas for the tech field.

Final thoughts

Apple now has the opportunity to keep its share price and investors intact. The company started offering a dividend for value investors, but it needs to show that it is still a growth company. Apple needs to be more innovative like Google, and not just copy the sectors that are out there. The new online radio service is great as a feature, but it will not give Apple Inc. (NASDAQ:AAPL) a future to look forward too. There has to be some kind of change at the company, or else innovation at Apple will be fiction.

The article Innovation at Apple: Fact or Fiction? originally appeared on Fool.com and is written by Terry Chrisomalis.

Terry Chrisomalis has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Terry 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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