Apple share price down, to bundle Beats with iOS

Apple Inc will start distributing its iOS operating system-based devices with subscription to the music service it acquired from Beats, challenging the market leader in music streaming Spotify.

According to people with knowledge of the matter, the implementation of the Beats service may start in March next year. Apple bought the headphone manufacturer earlier this year in a $3-billion deal.

Lately installing applications before distribution has become popular way of reaching new customers. According to Midia Research, Apples iTunes have a customer base of 200 million, while the Beats service has around 110 000 users.

In May Apple tried to return to the leading position in digital music by obtaining the headphone company Beats, after declines in iPod sales and iTunes downloads.

Spotify is one of the first companies to start streaming music, but is under pressure from increased competition and music artists like Taylor Swift, who withdrew her catalog from the free, ad-supported service due to an argument over the value of her work. Sotifys founder Daniel Ek stated that the music service had paid around $1 billion to artists in the past year.

Beats is likely to become the latest addition to the iTunes label, giving Apple more ground in the music industry. With its brands, iTunes, iTunes Radio and Beats, the tech giant is expected to compete against Spotify, Soundcloud and Pandora.

Apple has previous experience using its customer base to push new products, earlier this year the company bundled up its iBooks application with its latest iOS 8. Apple also installed U2s latest album on its customer-distributed devices, without asking whether they wanted it or not.

Spotify has also been using a similar strategy, it reached agreements to bundle its application with handset makers like HTC and telecommunication operators such as Vodafone and Sprint. Noone of which has a customer base as big as Apples, which reported in June that to date it has sold more than 800 million of its iPhones, iPads and iPods.

However, installing applications before distribution is not always a successful strategy. iTunes Radio, which was bundled with iOS 7, has not gained much ground against Pandoras dominance of the internet radio in the U.S.

Apple Inc fell 0.69% on Wednesday and closed at $114.67 on the NASDAQ, marking a one-year increase of 54.50%. Meanwhile in Frankfurt the stock gained 0.19% on Thursday to trade at EUR 91.26 at 08:02 GMT. The company is valued at $677.21 billion. According to the Financial Times, the 42 analysts offering 12-month price targets for Apple Inc have a median target of $120.00, with a high estimate of $143.00 and a low estimate of $60.00. The median estimate represents a 4.65% increase from the last price of $114.67.