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Apple (AAPL) Partners With Samsung, Boosts Services Reach

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Apple (AAPL - Free Report) recently partnered with Samsung, one of its long-standing rivals, to make iTunes content available on the latter’s smart TVs, per CNBC.

The Korean smartphone maker will include an app to its smart TV sets in the upcoming months, allowing users to easily watch iTunes movies and TV shows. Additionally, users can purchase and rent new content from the app.

Samsung noted that it will add Apple's AirPlay 2 software to the TVs, thereby allowing iPhone and iPad users to stream their device content on smart TVs.

Samsung Partnership: A Smart Move by Apple

Apple’s partnership with Samsung is expected to help the company reach customers outside the iOS ecosystem, thereby boosting its service reach. Notably, Samsung commanded 33% smart TV market share in the United States in 2018, per Statista, and is also the world’s largest TV manufacturer with more than 20% market share.

Moreover, if Apple includes its streaming content in the smart TV app, this may help the company fend off competition from the likes of Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) Prime, as it increases user reach.

Apple Inc. Revenue (TTM)

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

Will Partnerships Aid Apple Music Revenues & Competitive Position?

Prior to the said partnership, Apple partnered with Amazon, allowing Apple Music subscribers having Echo devices to enjoy Apple Music’s 50 million songs beginning Dec 17. The deal is expected to help the iPhone maker fast penetrate markets like India, where it is failing to make any go ahead. However, Amazon has a strong foothold in the same, courtesy of its Prime subscription service.

Moreover, Apple Music’s availability on Amazon Echo may help Apple take the lead over its major rival Spotify (SPOT - Free Report) . Notably, Amazon had the highest market share (31.9%) in the smart speaker market in third-quarter 2018, per Canalys.

However, Spotify is currently the dominant player in the paid, premium music streaming market, boasting a user base of 191 million, and 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.  

Nevertheless, Apple Music is witnessing an increasing adoption as it continues to increasingly contribute to services revenues (accounting for 15.9% of sales in the last reported quarter). Moreover, the partnerships are expected to strengthen its competitive position, thereby aiding top-line growth.

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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