Is Apple Scared of Amazon’s Music Moves?

Amazon (NASDAQ:AMZN) is coming head first at Apple (NASDAQ:AAPL) with its new music subscription service directly rivaling iTunes, but will the iPhone maker respond?

Amazon announced last week that its 22-million song catalog was now optimized for users of Apple devices in a way that lets them circumvent the iTunes store and pay lesser for their music. Users will be able to the Safari web browser on their iOS device to access the music, with purchases then directly stored to their Amazon Cloud Player library.

Should you buy or sell Apple’s stock ahead of earnings in a few days? Our 20-page proprietary analysis will help you save time and make money. Click here to get your SPECIAL REPORT now.

Amazon offers prices such as $5 albums and free or 69-cent songs. In addition, users can buy music over an iPhone and then play it on any Apple or Android device. Both this ability to easily transfer out of the iOS ecosystem and pay lesser may pressure Apple to lower its own prices, some believe.

“Apple will probably price-match on the top sellers,” e-commerce consultant Brian Eisenberg told MarketWatch. According to Eisenberg, waging a price war was typical of Amazon, which did the same with e-books once Apple started selling them for its iPad. “Amazon will lose pennies in the short-term for long-term loyalty, but Apple is not a low margin business,” he said.

However, Apple does not usually behave like a normal rival would. “If Apple responds like others in the open market it will reduce the price of their music to compete with Amazon,” technology analyst Jeff Kagan told MarketWatch. “That said, Apple doesn’t typically act the way competitors do.”

Apple may, on the other hand, give more specials and limited-time offers rather than suddenly slash prices, according to Morningstar analyst Brian Colello. What it certainly won’t do is to open up iTunes on other platforms as a reciprocal measure. “I highly doubt that iTunes will appear on [Google (NASDAQ:GOOG)] Android much in the same way that Google Play likely won’t appear on iOS,” Colello said.

Start 2013 better than ever by saving time and making money with your Limited Time Offer for our highly-acclaimed Stock Picker Newsletter. Click here for our fresh Feature Stock Pick now!

Apple’s iTunes took 64 percent share of the digital music market and 29 percent share of all music sold at retail last year, according to NPD. By comparison, Amazon had 16 percent of the digital market. Apple also has a slightly larger collection, with 26 million songs to Amazon’s current figure of 22 million.

Don’t Miss: This Analyst Has High Hopes for Apple.