Arch rivals Samsung and Apple partner up on iTunes to boost new revenue streams

South Korean consumer tech giant Samsung said its latest smart TVs will support iTunes – developed by arch rival Apple - by the end of March 2019. This is the first time Apple has allowed third-party devices to access its video content outside of Windows PCs.

The announcement is surprising to many, however, regional technology analysts called it a ‘prudent’ move.

"Samsung is a wise gladiator. This move is a meal in itself… incorporating iTunes is a prudent manoeuvre," Sam Blatteis, chief executive of The Mena Catalysts, which advises technology companies on policy and government affairs in the region, told The National.

Samsung smart TVs will be able to access and play iTunes movie and TV show library, the company announced. Consumers can purchase or rent video content from iTunes through a dedicated app, which will be developed exclusively for Samsung TVs, it said.

This cooperation will help both companies to enhance their portfolio, while reaching more consumers in the region, Mr Blatteis noted.

“With this pact, Samsung and Apple can expect an increase in the following in the region… posing a stiff competition for others,” he said.

Samsung is also making its foray into video-on-demand services in the Middle East and North Africa region, entering into direct competition with California-based Netflix in the nascent Arabic content streaming segment.

iTunes is used to play, download, and organise digital multimedia files on personal computers and other devices. Even the old versions of Samsung smart TVs can add features to support iTunes after a firmware upgrade.

The new Samsung TVs will also feature support for AirPlay 2, Apple’s wireless streaming service. It will allow content including videos, podcasts and music to be streamed directly to smart TV from any Apple device.

The announcement of two fierce rivals partnering up, while mutually beneficial is not an outright shock as Apple already supports other platforms - iTunes on Windows and Apple Music on Android.

For Abbas Ali, managing editor of TechRadar Middle East, Apple is probably looking at its services business, which is currently its fastest growing domain, in a different light.

"As good as the iPhone is, we've seen its [services] growth rate starting to flatten out because of market saturation and Apple thus needs to look at alternate sets of revenue," Mr Ali  said.

The services businesses heavily depend on the number of devices it can be used on and with competitors Spotify and Netflix working across almost all devices, it makes sense for Apple to have its upcoming TV services be available across all platforms, he said.

There is a possibility that Apple will roll out its services to other manufacturers as well.

“Apple has already announced AirPlay 2 compatibility with LG and other TV sets and I wouldn't be surprised if the iTunes app also makes its way to it soon.”

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Apple, which is finding it difficult to sell iPhones and has recently revised its revenue outlook downwards for the first time in nearly two decades, is definitely more focused on services segment. In 2018 fiscal, the Cupertino-based firm earned more than $37.1 billion (Dh136.2bn) in revenue from services business.

Last week, Apple announced a buoyant results in its services segment during the holiday season.

“The holiday week was our biggest week ever with more than $1.22bn spent on apps and games,” said Phil Schiller, the company’s senior vice president of worldwide marketing.

Samsung's quarterly profit and sales have also missed estimates, as demand for memory chips slumped in the last three months of 2018, the same quarter that Apple reported  anaemic sales in China.

“With services a key part of the Apple flywheel and one of the only silver linings in an otherwise dark period of growth, Cook & Co. need to double down on content and distribution partners going forward,” Bloomberg quoted Dan Ives, an analyst with Wedbush Securities, as saying.

Apple and Samsung were at war for years over smartphone patents, with Apple accusing its rival of copying the iPhone’s design. After multiple trials and Apple being awarded millions of dollars, the two companies eventually settled in June 2018, ending litigation.Beyond lawsuits and hardware competition, the companies have still long shared a close partnership, with Apple relying on Samsung for components such as screens in the latest high-end iPhones. In recent years Apple has taken steps to wean itself off Samsung by developing its own future screen technology and device processors, Bloomberg reported.

The “deal shows that perhaps Apple doesn’t quite view Samsung as the enemy it used to,” Michael Gartenberg, a former Apple marketing executive, wrote on Twitter. “There are others both Apple and Samsung should worry about. Or the enemy of my enemy is my friend.”