Back to top

Apple Partners Amazon to Boost Sales, Gain Edge Over Spotify

Read MoreHide Full Article

Apple (AAPL - Free Report) is expanding its distribution horizon in order to sell more devices. Per a recent CNN report, the company will make its devices, including iPhones, iPads, and Apple Watches, directly available on Amazon’s (AMZN - Free Report) e-commerce site.

Notably, 71% of Apple’s fiscal 2018 sales were from indirect distribution channels like Amazon. Also, the company’s devices currently available on Amazon’s platform through authorized third-party merchants will remain.

Additionally, Amazon recently confirmed that Apple Music subscribers having Echo devices can enjoy Apple Music’s 50 million songs starting from the Dec 17 week.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Amazon Partnership: A Smart Move by Apple

Apple’s strategy to partner Amazon as its online distributor is a smart move. The deal will help the iPhone maker fast penetrate markets like India where it is failing to make any go ahead but Amazon has strong foothold courtesy of its Prime subscription service.

Apple has been negatively impacted by concerns about waning demand for the latest iPhones that have been supported by rumored production cuts and reduced outlook by a number of suppliers. Reportedly, Apple has undertaken new marketing strategy like offering promotional discounts and trade-ins to bolster iPhone sales in the holiday season.

The Amazon partnership will now enable a user to order Apple devices by just speaking to the Echo device that is connected to his/her Amazon account. Notably, Amazon Echo is gaining traction due to this seamless integration and ability to support a multitude of smart-home products.

Moreover, Apple Music’s availability on Echo is expected to boost Apple’s competitive position against Spotify (SPOT - Free Report) . Notably, Amazon had the highest market share (31.9%) in the smart speaker market in third-quarter 2018, followed by Alphabet (GOOGL - Free Report) owned Google’s share of 29.8% per Canalys.

Smart speakers are mainly used to listen to music (70%) and its penetration is expected to reach 48% by the end of 2018, per Adobe (ADBE - Free Report) Analytics survey. Both Spotify and Apple are gaining from this trend. Together, both the companies constitute nearly 80% of the total domestic music streaming market.

However, Spotify with a global user base of 191 million is way ahead of Apple’s user base of more than 50 million. Additionally, Spotify’s premium subscribers soared 40% year over year to 87 million, in third-quarter 2018.  The company also added 4 million new premium users sequentially.

Zacks Rank

All three companies, Apple, Amazon and Spotify, carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like