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Nokia’s “Apple iPhone killer” touch-screen phone is expected to be unveiled today. Nokia’s “Tube” will feature a sleeker design than the T-Mobile G1 device and is expected to be packed with a variety of services and applications supplied by Nokia.

Analysts say the market has been waiting for Nokia to respond to Apple for 18 months. Nokia shares have tumbled 50 per cent this year, partly because of its slow introduction of touch-screen phones.

Nokia is also expected to unveil more details of its ‘Comes with Music‘ package at an analyst and media event in London today.

“‘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.

Instead of buying individual songs (like iTunes) or paying a subscription (like Rhapsody, the Zune Pass, and others), the cost of downloading music will be built into the price of the phone.

After your free year expires you then have to pay a monthly subscription fee to retain the service. Or buy a new Nokia phone, costing $200-$600. You will be able keep all downloaded tracks after the year is over.

Sony Ericsson’s PlayNow Plus is a challenger to Nokia’s ‘Comes With Music’ service. They have already secured music catalogues from the ‘big four’ record labels; EMI, Sony BMG, Universal and Warner Music Group. ‘PlayNow Plus‘ will use the Sony Ericsson W902 Walkman which will ship with 1,000 songs preloaded and will cost Telenor subscribers SEK99 (US$15) a month.

On Tuesday, Nokia announced it will buy Oz Communications for an undisclosed amount. The company’s IM, e-mail, and social-networking technologies are used by several mobile operators, including Verizon Wireless, Sprint Nextel, T-Mobile USA, Alltel, and Rogers Wireless. With just 220 employees, Oz claims to have 5.5 million monthly paid users using its products.

The acquisition adds to the other mobile social media and communication buys Nokia has made over the past couple of years, including Twango, Plazes, Enpocket, and Navteq.

Nokia just officially launched its Ovi platform, which serves as a hub for many of its services. The company is facing competition from Apple’s iPhone, and Google’s new Android operating system which are also emphasizing services and applications as way to differentiate their products.

Nokia hopes to integrate devices and services, selling phones with navigation, mapping, and music. The idea is that the services will help differentiate the handsets from others on the market and also provide the company with additional revenue.

According to Informa Telecoms, about 50 million people, or about 2.3 percent of all mobile users, already use the mobile phone for social networking, from chat services to multimedia sharing. The company forecasts that penetration will mushroom to at least 12.5 percent in five years.

Nielsen Mobile says the typical U.S. mobile subscriber sends and receives more text messages than phone calls. During the second quarter of this year, Nielsen found domestic wireless subscribers sent or received an average of 357 text messages each month, compared with an average of 204 phone calls placed or received.

Smartphone Sales to End Users by
Vendor, 2Q08 (Units)Worldwide: Preliminary

Company

2Q08

Sales

2Q08 Market Share (%)

2Q07

Sales

2Q07 Market Share (%)

2Q08- 2Q07 Growth (%)

Nokia

15,297,900

47.5

14,151,689

50.8

8.1

Research In Motion

5,594,159

17.4

2,471,200

8.9

126.4

HTC

1,330,825

4.1

605,900

2.2

119.6

Sharp

1,328,090

4.1

2,275,401

8.2

-41.6

Fujitsu

1,071,490

3.3

877,955

3.2

22.0

Others

7,598,711

23.6

7,472,441

26.8

1.7

Total

32,221,175

100.0

27,854,586

100.0

15.7

Worldwide smartphone sales totaled 32.2 million units in the second quarter of 2008, a 15.7 per cent increase from the second quarter of 2007, according to market researcher Gartner. Smartphones’ share remained stable at 11 per cent. Nokia held the No. 1 position with a 47.5 per cent market share in the second quarter of 2008, a year-over-year growth about half of the market average. Nokia faced increased competition from Apple, HTC and others.

In related news, a federal panel today will decide if Apple, Amazon and the like should pay higher royalties to music publishers, notes Business Week. But 99¢ songs likely aren’t going anywhere.

A contentious battle between Apple and part of the music industry is set be decided today (Oct. 2), when a panel of judges appointed by Congress is expected to rule whether online music distributors should pay higher royalty fees to music publishers.

The ruling by the Copyright Royalty Board affects not only Apple’s iTunes but also Amazon.com, EMusic, RealNetworks’ Rhapsody, and Best Buy’s Napster. Music publishers, who represent creators of song lyrics and sheet music, want an increase in royalty payments while Apple and the other companies are pushing for a reduction.

Apple has sold more than 160 million iPods and iTunes has sold over 5 billion songs. The store is now the country’s largest music retailer, topping Walmart.

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