iTunes Asian entry to have minimal impact: Ovum

• Apple’s iTunes’ entry into the region would impact Apple users more than others
• iTunes music service could potentially allow Apple to gain more loyalty, help combat piracy

THE advent of the popular iTunes store in Asian markets last week is expected to cement greater loyalty for Apple products amongst its diehard fans but its launch may not necessarily endear others who are not Apple users to the store, according to an industry analyst.
 
The Cupertino, California-based computing giant made available its iTunes music store in 12 additional markets in Asia last Wednesday (June 27) but did so in a low key approach, as it only made the announcement over its website and through direct e-mail messages to existing iTunes subscribers.
 
The iTunes Store is now available in Malaysia, the Philippines, Singapore and nine additional markets in Asia: Brunei, Cambodia, Hong Kong, Laos, Macau, Taiwan, Thailand, Sri Lanka and Vietnam.
 
Previously, subscribers in these countries could only gain access to the iTunes store for the explicit purpose of buying software applications for their iPod, iPhones and iPads. As of last week, consumers can now buy music directly from the iTunes store.
 
Jan Dawson, chief telecoms analyst at Ovum, said he believes that it would be existing Apple users who will likely be drawn to the newly launched iTunes store and thus, the impact would be largely limited to those who have iPhones, iPods or iPads and not those who own other smartphones.
 
“Buying through iTunes is a much more straightforward way to get content onto Apple devices, so I would expect the impact to be largely limited to those having Apple products,” Dawson (pic) told Digital News Asia in an e-mail interview. “These are often the wealthiest and most brand conscious, and it will be these that will be drawn to the iTunes store.”
 
The Ovum analyst added that those who have bought more affordable devices from other vendors, such as Samsung, would have already gained music content from other sources, and would unlikely want to switch over to the iTunes store just to buy music.
 
Asked why it took so long for Apple to offer music to these countries, Dawson said it was because it had needed to establish all the necessary commercial relationships, acquire licenses, and build up a good base of local content before doing so.
 
“Every new market Apple wants to sell content in requires new licenses and agreements with content owners,” he said. “Apple would also want to offer local content rather than just a generic set of global content and both these arrangements take time.”
 
Dawson said that for Apple, it’s just a matter of opening new markets in a specific order, and clearly the time for it to enter these markets had come.
 
Noting that these [Asian] markets weren’t the largest, earliest nor the wealthiest, Dawson said Apple has largely picked the “low-hanging fruit” of more established markets and this was probably why Apple prioritized the markets where it saw the most significant opportunities first before going into others.
 
“Clearly, Apple is now seeing sufficient demand here for its devices that it wants to offer the content to go with them to complete the experience,” Dawson said.
 
iTunes the differentiator
 
Manoj Menon, partner and Asia Pacific managing director for Frost & Sullivan, shared a different view, noting that the coming of the iTunes store to the region “helps Apple leverage the completeness of its ecosystem a lot better in these markets.”
 
This step forward will enable Apple to compete more effectively with Android-based phones as these have done relatively well in several of these countries because of the lower price models that are available from a variety of different manufacturers,
Menon (pic) said in a statement.
 
“The iTunes store is also a way to get long term relationships with customers as the iTunes store can be a big differentiator,” he said. “This also opens the market for Asian content owners to leverage this platform and to drive sales in their home markets, which will accelerate market development of digital content in this region.”
 
Menon also said the opening up of the iTunes store in the region is a “very positive development towards helping the industry fight piracy in several of these countries.”
 
“The availability of content in attractively packaged and priced formats will encourage and enable several users to stay away from piracy,” he said. “This is a very powerful development for the industry and the ecosystem.”
 
Menon also noted that regional giants China, India and Indonesia were not a part of the launch and said Apple needed to urgently be able to launch the iTunes Store in these countries, particularly China and India.
 
“This has not yet been announced, but these markets will be key to long term continued growth for Apple.” 

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