Nokia dials up music, gaming service

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LONDON -- Nokia, the world's largest cell phone maker, has unveiled an online music store, a gaming service and four new multimedia handsets in a move to take a greater share of consumer spending from mobile operators.

The Finnish group also threw down the gauntlet to Apple Inc.'s popular iTunes service Wednesday, when it introduced the new services at an all-day London event set to culminate in a party at the Ministry of Sound, one of the city's top dance clubs.

Nokia, which sells more than one-third of the world's cell phones and seeks new sources of revenue as the industry matures, said its core market of making mobile handsets was just "not enough anymore."

"We are trying to make the cake bigger for everyone: our piece grows, but also operators will benefit through data revenues," said Tapio Hedman, head of marketing for Nokia's multimedia unit.

Nokia's shares jumped. But some of its top customers -- mobile phone operators that have built their own music service offerings -- reacted cautiously to the news. They noted that Nokia's offerings would be judged on a country-by-country basis.

"Some operators in Europe will not like this at all," said Shaun Collins, managing director for research firm CCS Insight.

CEO Olli-Pekka Kallasvuo, who took over last year, told a news conference the company would start to sell touch-screen phones -- Nokia's answer to Apple's iPhone handsets -- using its popular S60 software next year.

Nokia shares jumped almost 5.3% to €23.46 by 1511 GMT, outperforming a 1% rise on the European DJS Stoxx index (.SXKP: Quote, Profile, Research).

Nokia said it would wrap mapping services, its new music store and gaming services into an Internet service offering under new brand "Ovi", a Finnish word for "door."

"Nokia is seeking to become a gatekeeper to services to increase brand loyalty -- one brand with several hooks," Glitnir analyst Jussi Hyoty said.

Nokia said it aimed to introduce the brand to consumers on a step-by-step basis, combined with its other advertising campaigns. "We will do some Ovi-specific advertising later, but we are not planning a traditional marketing campaign," Nokia's Hedman said.

Nokia unveiled four new phone models including a top-end music and gaming phone, the N81, and a new version of its top profit generator, the N95 handset, which is seen by analysts as the company's answer to Apple's iPhone.

"The range of new handsets with good storage steals a march perhaps on iPhone. If they can get the high-storage device out before the iPhone hits, that would be a good idea," said Daniel Winterbottom, a senior analyst at research firm Informa.

Apple, which broke into the cell phone industry this year, saw its long-awaited iPhone handsets fly off shelves when the sleek, touch-screen multimedia device hit U.S. stores in June.

Nokia also unveiled two midpriced music phones: the Nokia 5310 and 5610.

Nokia said it would roll out its own music store in key European markets -- Britain, Germany, France, Italy and Spain -- later this year, with songs selling for €1 ($1.36) each, a similar price point to Apple's iTunes.

The company plans to open a store in India next year and is also in talks to enter the U.S. and Chinese markets.
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