ITunes Radio features more than 200 free stations, supported by advertising for some users, Apple said. The Web-music service is part of iOS 7, an overhaul of the mobile operating system with a simpler user interface with more translucent design elements.
With smartphones sharing many physical traits and technological features, device makers are relying more on software design and services to gain an edge and lure consumers. While iTunes Radio is aimed at boosting the appeal of iOS 7, it may not be enough to draw users away from established offerings by Pandora Media Inc. and Spotify Ltd.
"ITunes Radio as a Pandora clone is a lot less disruptive than a Spotify clone would have been," Jan Dawson, an analyst at Ovum in London, wrote in a research note. "This is a nice free feature that lots of people will probably try out, but existing Pandora users won't have much reason to switch."
Apple shares have declined 37 per cent before Tuesday from a record in September, a month before Apple's last major product announcement. The period since the debut of the iPad mini is the longest product drought for Apple in at least a decade.
IOS accounted for 18 per cent of global smartphone shipments in the first quarter, while those running Android made up 74 per cent, according to Gartner. IPhone sales climbed about 16 percent in the first quarter, lagging the smartphone market, which grew 43 per cent.
"Apple has been in a funk, and this is an important event to highlight how they are innovating," said Ben Reitzes, an analyst at Barclays in New York.
Changes to the software behind the devices that generate more than 70 per cent of Apple's sales has been in the works since the company's chief executive Tim Cook shuffled his lieutenants, putting head industrial designer Jonathan Ive in charge of the look and feel of Apple's software.
A longtime confidant of co-founder Steve Jobs and the draftsman behind the iPhone and Mac, Mr Ive has been leading the revamp of IOS. The new version also redesigns often-used applications such as e-mail, calendar and text messaging.
* Bloomberg News