[Admin]

At an analyst and media event in London today, Nokia plans to unveil their company's first touch-screen phone, the Nokia 5800 XpressMusic, otherwise known as the Nokia "Tube," a device designed to compete directly with Apple's iPhone. Along with the phone, Nokia will also detail plans for their new "Comes With Music" service, a 12-month subscription service which offers unlimited downloads. There's no charge to download the individual tracks because the cost for the music is bundled into the cost of the phone.

Sponsor

About "Comes With Music"

Nokia isn't the only company with a subscription music service,  but theirs will be the first to let customers keep all the music that they download after the 12-months of the Comes With Music service expires. This is much different than other music subscriptions services, like Napster, for example, where you lose access to your music as soon as you stop paying. Although the tracks will be wrapped in DRM and tied to the handset and to a PC, they will be permanently owned by the customer. Other companies planning similar services include Sony Ericsson who recently announced PlayNow plus (PNP) and Korea's LG Electronics.

Nokia's other "Comes With Music" phone, this new one should be much better:

With 2 million tracks available, the "Comes With Music" service is no small offering, and considering the touchscreen device it's being paired with it's clear that Nokia is prepared to do battle with other smartphones. Whereas before Nokia only competed with conventional cell phone makers like Motorola, Samsung, LG Electronics, and Sony Ericsson, they're now going up against big competitors like Apple, Google, and Research in Motion (RIM), companies who are driving forward adoption of mobile internet. "Suddenly you have the mightiest companies in the world there as your competitors. That is a little mind-boggling," said Nokia President and CEO Olli-Pekka Kallasvuo.

Making Mobile Music Happen Isn't Easy

To get to the point of being able to offer music on a mobile device, bundled into the cost of the phone, Nokia had to collaborate with both the slow-to-adapt music industry, who worry that mobile music offerings will cannibalize existing music spending (see chart below). Also a concern is the fact that, in many cases, consumers aren't willing to pay more for a mobile phone or contract just to get unlimited downloads. For example, a recent study by Jupiter Research found that only 5% of Europeans would choose to pay more for the service, a figure that speaks to the perceived value of subsidized services - and perhaps, the value of music in general. On the bright side, though, analysts at TNS Technology said that the launch of "all-you-can-eat" music downloads would reduce illegal file-sharing of songs. This is backed up by Jupiter Research, who found that half of the interested customers in this technology claim to be file-sharers.

Credit: Jupiter Research

Here in the U.S. there are more people interested in a "Comes With Music" type phone than a subscription music service. 13% would choose an affordably-priced $150 handset and only 6% would go for a $15/month subscription service.

Fighting Apple Means More Than Music

Nokia CEO Kallasvuo specifically singled out Apple as one of the mobile industry's main players, saying "We have a new, credible competitor in this business. You know I need to take my hat off. Of course we need to be able to respond to any competitor and we will." With the launch of the new phones and music service, Nokia thinks they have something that can threaten iTunes because they believe that ultimately, price and selection will win out over brand identity.

We're not so sure that it's that simple.

The Apple iPhone is far more than just a simple music/phone pairing. It's the App Store that makes Apple's offering so unique. Even Google new Android OS (now available on the T-Mobile G1) knew they had to build an App Store of their own in order to have any chance against the iPhone.

While overall, the Nokia phone has a more appealing form factor than the G1, there are other areas of concern is in its design. Where Apple has mastered simplicity and ease-of-use with their interface, the Nokia phone runs the Symbian platform, something many potential customers will be unfamiliar with.

Breaking News Section: Prepare To Be Live Blogged

We're waiting on the official announcement, but in the meantime, here's what we know about the Nokia Tube:

This photo was widely available on Flickr before being yanked down -

• Phone is expected to include a 3.2in color touchscreen, full internet browsing connectivity, a 3.2 mega-pixel camera and built-in GPS.
  
  
• There are a lot of photos on Flickr for the Nokia Tube, but no one is sharing...all are copyrighted and we're not taking any chances. But a quick search will help you find them.
  

Discuss




More...