Apple iTunes radio seen as little threat to Pandora

Apple Inc.’s foray into the online- radio business may not turn out to be a Pandora Media Inc. killer after all.

Apple introduced iTunes Radio yesterday as part of a broad overhaul of its mobile operating system for the iPhone and iPad. The service shares many features with other Web-radio products, such as letting users create stations based on preferences.

Pandora’s shares climbed after Apple announced the feature with little fanfare at its annual developers conference in San Francisco, indicating that the company won’t immediately spend heavily to promote the service against competitors. Pandora’s stock had been dragged down by as much as 28% from a two-year high in the past month amid speculation that Internet radio from Apple would be robust enough to lure away users.

“In terms of features they talked about, it was a little underwhelming,” said Douglas Anmuth, an analyst at JPMorgan Securities LLC in New York. “They didn’t give a whole lot of details.”

The music service, which will be supported by advertising and aimed at driving new song purchases through iTunes, was part of a sweeping redesign of Apple’s iOS mobile operating system that Chief Executive Officer Tim Cook unveiled at the conference. iTunes Radio will be available later this year when iOS 7 is rolled out to users.

Shares of Apple increased less than 1% to $440.23 at 9:59 a.m. in New York. Through yesterday, they were down 37%  from a record in September. Pandora rose 2.8% to $15.92, and was up 69% this year before today.

Software, Services

“ITunes has expanded and extended its radio feature to match what other services have offered for years,” Joe Kennedy, CEO of Oakland, California-based Pandora, said in an interview. Pandora has more than 200 million registered users, he said.

By adding new services and delivering software upgrades, Apple, based in Cupertino, California, is seeking to blunt the advance of Google Inc.’s Android mobile operating system, which now runs on 74% of smartphones, compared with Apple’s 18% in the first quarter, according to research-firm Gartner Inc. IPhone sales climbed about 16% in the first quarter, lagging the smartphone market, which grew 43%.

Pandora’s app is available on Android, iOS and on any computer with a Web browser, as well many television set-top boxes, while iTunes Radio isn’t available on Android.

Apple’s revamped software carries a new overall look, including a simplified user interface, new color scheme and the removal of design elements such as the wooden bookshelves for the Newsstand application. Applications for the camera, pictures, e-mail, calendar and weather were all redone.

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