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Nokia takes on Apple in online software "arms race"
Mon Mar 9, 2009 9:47am EDT
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By Tarmo Virki, European technology correspondent
HELSINKI (Reuters) - Nokia Oyj is betting a wider and more tailored offering of media and software for its phones will prove attractive when its Ovi online store opens in May and goes head-to-head with Apple Inc's App Store.
The Apple store has proved the market for software supermarkets in the mobile world, with more than 500 million applications downloaded in only half a year.
Nokia's market is potentially bigger -- it says the Ovi store will reach some 50 million consumers when it opens, while Apple has so far sold less than 20 million iPhones.
But this does not in itself guarantee Nokia's success.
While hundreds of millions of people use its phones every day, Nokia has yet to match Apple's success in getting people to pay for software downloads, despite its smaller rival getting a later start. Nokia has also lagged Apple in introducing popular touch-screen phones.
Nokia says it will give 70 percent of all download revenue to developers, just like Apple, if consumers pay by credit card.
But developers will earn less per transaction if consumers opt to pay through their operators, an option that will initially be available in nine countries.
"Because of geographic coverage, credit cards will probably remain the main payment method," said Marco Argenti, vice president of media at Nokia. "Its going to be the default payment system across the world. (But) in nine countries ... developers can activate operator payments."
Thus far, in cases where consumers can choose between paying via their operator or using a credit card, more than 80 percent use operator billing, Nokia's own data from the usage of its N-gage gaming service shows.
The size of the market shows it's important for Nokia to get its online store right.
Research firm Strategy Analytics has forecast the value of the mobile content market -- including downloadable games, ringtones, wallpapers, video, mobile TV, text alerts and mobile web browsing -- to grow 18 percent to $67 billion this year.
But competition is growing and Microsoft, Orange and others have also announced new online stores.
"These companies are really entering the arms race," said Ford Davidson, chief executive of Seattle-based Dashwire, which makes software for linking cellphone content to the Web.
"Nokia is the dark horse in this race. They have an unparalleled distribution channel," Davidson said. Continued...
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