Apple's digital-music offerings need to be expanded and improved if it is to see off fierce competition in the sector, industry experts say.
BusinessWeek magazine says Apple should "solve nagging quality problems", and "make friends with its rivals".
It also recommends it offers an iTunes subscription service in addition to the pay-per-download service, pointing out that more than 1 million people now have online music subscriptions – despite Apple CEO Steve Jobs' insistence that people "do not want to rent their favourite songs".
The report adds: "The subscription model may get even more appealing if Microsoft succeeds with its new software, code-named Janus, that lets subscribers listen to rented music on portable players that use its Windows Media software."
To compete with the increasing number of devices "Apple needs to broaden its product line". "It should consider forming partnerships to add iPod technology to cell phones and other futuristic devices."
It continues: "And it needs to address nagging quality problems, such as scratchy-sounding headphones and disappointing battery life." The magazine advises Apple to: "Hit a higher standard to keep its market share, premium prices, and good buzz it has with buyers."
The report concludes that most of all Jobs needs to remember the prime lesson of the Mac: "Make friends – lots of friends".
"Jobs should find more partners so Apple's technology can become the de facto digital- music standard," it states.