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Monday, June 10, 2013

Apple Enters Net Radio’s Busy Field

Apple Enters Net Radio’s Busy Field

SAN FRANCISCO â€" Apple is known for making some of the finest hardware in the world, but one of its biggest stumbling blocks has been services that rely on an Internet connection.

Timothy Cook, left, Apple’s chief, and Jony Ive, center, its design head. Apple will unveil a new music service on Monday.

Apple’s iTunes software on a MacBook Air. The program’s 500 million users make Apple No. 1 in paid digital music sales.

Apple’s Maps app for iPhones was initially so bad the company apologized. Ping, Apple’s social network for discovering songs, was killed because hardly anyone used it. And iCloud, its service for synchronizing user data across devices, has been criticized for being unreliable, though it has not had as many glitches as its predecessor MobileMe, which had an e-mail blackout that disconnected thousands of customers for days.

Now, Apple is giving online services another try, in an area where it has long been the leader: music. On Monday, at the opening of its annual developers conference in San Francisco, the company is expected to unveil an Internet radio service that will stream songs over a data connection instead of storing them on a device, according to people briefed on the negotiations. The service is expected to be free, but supported by ads.

With its Internet radio service, Apple will be following other online music services, like Pandora, Spotify and Rdio. But it could spread this type of music consumption further into the mainstream, some analysts say.

“The genius of iTunes 10 years ago was that they made the mainstream consumer understand what digital music was, and how it all worked,” said Russ Crupnik, an analyst at NPD Group who studies the digital music market. He said Pandora was mainstream, with 200 million registered users, but it was not a dominant global player, and that a similar service from Apple would expose more people to online radio.

The company is also expected to introduce new Mac notebooks and a redesign of iOS, its software operating system for iPhones and iPads, at the four-day developers conference. The conference includes seminars where software developers can get training on the latest Apple software development tools so they can start making apps.

The new operating system will be the first mobile software system made under the company’s lead hardware designer, Jony Ive. Mr. Ive was put in charge of software design after the company fired Scott Forstall, the former head of mobile software development, amid the flurry of negative news reports surrounding Apple’s mapping software.

Before taking over software design, Mr. Ive made it known in the company that he did not like some of the visual ornamentation s in Apple’s mobile software, particularly the use of textures representing physical materials. Under his direction, elements like the yellow-notepad inspired Notes app and the leather borders in the Calendar app for the iPad are expected to be removed from the software. The overall look will be smoother and less ostentatious, according to a person briefed on the company’s plans, who asked not to be named.

For Apple, the expansion into streaming music underscores a competitive issue: one of its chief rivals, Google, has long had robust Internet services, like Gmail and Google Apps, while over the years it has gotten better at designing the software and hardware for its phones and tablets.

But while Apple struggles with Internet services, its stock is down about 37 percent after peaking at a little more than $700 in the fall. The company is still selling tens of millions of iPhones and iPads, but investors are concerned about its growth slowing and profit margins getting tighter. A shift into services like Internet radio could present new opportunities to make money.

But James McQuivey, an analyst at Forrester Research, says he thinks Apple is too late in this game. The company has to present an Internet radio service that is better than what is out there, he said, or people will continue to just buy its hardware and use other companies’ services.

“It’s going to have to innovate,” Mr. McQuivey said. “It can’t just be Pandora with an ‘i’ in front of it or Spotify with an ‘i’ in front of it.”

In the late 1990s, the music industry was in turmoil because many Internet users quickly learned they could download their favorite songs for free instead of paying for albums. Steven P. Jobs, Apple’s late chief, approached the music labels with the idea of a store offering the ability to download songs a la carte for 99 cents a download.

“When we first approached the labels, the online music business was a disaster,” Mr. Jobs was quoted as saying in the book “The Perfect Thing: How the iPod Shuffles Commerce, Culture and Coolness.” “Nobody had ever sold a song for 99 cents. Nobody really ever sold a song. And we walked in, and we said: ‘We want to sell songs à la carte. We want to sell albums, too, but we want to sell songs individually.’ They thought that would be the death of the album.”

This article has been revised to reflect the following correction:

Correction: June 9, 2013

An earlier version of this article misstated how long the Pandora service has been available. It was introduced eight years ago, not 13.

A version of this article appeared in print on June 10, 2013, on page B1 of the New York edition with the headline: Apple Enters Net Radio’s Busy Field.