Companies with online music stores such as Apple (AAPL), Amazon (AMZN) and, as of recently, Google (GOOG) offer digital music storage in the cloud. Google's recent revamp of the Android marketplace, now called Google Play, poses the greatest threat to Pandora (P). Forget the Pandora and Sirius XM Radio (SIRI) rivalry; with Google Play in the game, their tug-of-war is insignificant.
Google Play allows users to upload up to 20,000 songs for free. These songs can be streamed on any smartphone, tablet, or computer, and it has a user-friendly and fast interface. This is a game changer; compare it to iTunes Match (Apple's music storage service), which requires a $24.99 yearly subscription fee in order to upload songs not purchased from the iTunes store. Similarly, Amazon's music storage, Cloud Drive, allows up to 1,000 songs to be uploaded for free, then offers a tiered pricing plan for more storage starting at $20.
At the moment, Google's Android platform has the majority of market share. If Google can pull this off successfully, expect it to be adopted quickly. This move by Google will put pressure on Apple and Amazon, forcing them to restructure their pricing fees and offer more storage for free, all the while creating additional competition for Pandora.
Google Play will not entice every Pandora listener, but to those who would rather have unlimited skips and listen to ad-free music along with their own digital music collection, Pandora will seem much less appealing. I foresee most people traveling away from Pandora, and all signs seem to point to Google Play.
Disclosure: I am long AAPL. I am short AMZN.