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Nokia to take on Apple's iPod player

(Agencies)
Updated: 2008-10-03 10:13

The world's top mobile phone maker Nokia planned to launch its free music package yesterday, which analysts see posing a serious threat to Apple's dominance in the digital music business.

The Finnish company will also launch its first touch-screen phone, to rival Apple's popular iPhone, sources have told Reuters.

A combination picture shows the Nokia 5800 Xpressmusic handset in this undated handout. Nokia unveiled on October 2, 2008 its first touch-screen phone, priced well below Apple's iPhone model, as the world's top cellphone maker hopes to tap consumers for whom the iPhone has been too expensive. Nokia said it would begin selling the 5800 Xpressmusic model shortly, and will price it at 279 euros ($395), excluding subsidies and taxes.[Agencies]

Nokia's "Comes with Music" phone and music service, and similar packages from other hardware vendors, could help the music industry make up for falling CD sales and cut illegal downloads.

The battle for mobile music is increasingly crowded, with Sony Ericsson launching its music package this month in Sweden, while South Korea's LG Electronics plans a service similar to Nokia's.

Nokia's package will differ from others on the market as users can keep all the music they have downloaded during the 12 month subscription period. There are no charges for tracks downloaded, since the cost is bundled to the phone price.

'"Comes with Music' could potentially bring free music to millions of consumers, radically changing the music industry, and offering a significant threat to Apple's dominance," Strategy Analytics' David MacQueen said in a research report.

"In a market where price and selection are so much more important than brand to consumers, Apple cannot count on retaining users when competing with an offering which seems free to the end user," MacQueen said.

The service is Nokia's first major push into the services business. Last year the company unveiled a major revamp of its whole organisation, aiming to build a new business from Internet services to combat slowing handset growth.

"'Comes with Music' sees Nokia going head to head with new competitors - most notably seizing the initiative from Apple with an innovative new music proposition," said CCS Insight analyst Paolo Pescatore.

Michael McGuire, analyst with Gartner, said Apple and Nokia are set to fight for the same market, but with different approaches, as Apple charges per-track-downloads, while Nokia's offering reminds more of subscription service.

"Are they competing against iTunes at some point for (the consumer's) budget dollars? They are absolutely," McGuire said.

Last month Nokia unveiled the first "Comes with Music" model, a new version of its successful 531O phone, and said the sales of it will start this year.

Analysts said the choice of a relatively cheap model was a clear indication Nokia was trying to win over the consumers who often are not paying for the music, but getting it through file-sharing sites on the Internet.

"I think this is the first time the music industry can state they have a proper tool to fight file-sharing," said Mark Mulligan, analyst at Jupiter Research.