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Apple Gave Pandora Life and Could Take It Away

Stocks in this article: AAPL P GOOG

NEW YORK ( TheStreet) -- When Apple (AAPL) dumped Google (GOOG) Maps, a fair number of people got angry.

Apple wants to take Maps in house. That makes sense.

That said, I'm not sure why Apple would want to challenge Pandora (P) in streaming music.

BTIG analyst Richard Greenfield went on CNBC last week with a reasonable explanation.

Greenfield said Apple wants to own infotainment functions in the car via Siri. Fair enough.

Internet memes aside, it's not as easy as it looks to crush Pandora.

I give crush thesis advocates this: If Apple decides to drop Pandora from the App Store (and somehow render it useless for those who have already downloaded the app), Pandora is screwed.

It's simple, but true. When Apple launched iPhone, it made Pandora, transforming it from a primarily desktop-based application to a more versatile, mobile one. In reverse, Apple could break Pandora.

But, does Apple want to do this? And why would it?

First, all indications point to a good relationship between the two companies. Back in the early days of the iPhone, Steve Jobs welcomed Pandora on stage for a demonstration. Just last week, at the iPad mini launch, Apple mentioned Pandora and included it in presentation slides.

Second, despite the negative market sentiment, lots of people love Pandora.

It consistently ranks as one of the top downloads in Apple's App Store. More often than not, it's the leading music app.

If Apple removed Pandora from the App Store, it would face at least as big a backlash as the one that followed the dissing of Google Maps. When you mess with a daily habit such as Pandora, you run the risk of upsetting quite a few people.

Plus, despite Greenfield's conjecture, iRadio could backfire.

Apple apparently would make iRadio an ad-supported service. If it intends to challenge Pandora in local markets, it's important to realize that Pandora has a huge head start from an infrastructure standpoint (e.g., sales staff). Plus, it already dominates Internet radio marketshare and rates as one of the top, if not the No. 1 station, in the nation's largest markets.

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