Nokia pledges smartphone assault on Apple

Nokia's leading N97 smartphone has been criticized by some analysts as a poor alternative to Apple's iPhone.
Nokia has pledged to strike back at Apple and produce mobile phones that will compete effectively with the U.S. technology company’s iPhone.

Olli-Pekka Kallasvuo, chief executive of Nokia, the world’s largest mobile phone maker, said that it was aiming to be “even more competitive” following criticism that it had failed to come up with a handset to match the iPhone. In an interview with the Financial Times, Mr Kallasvuo also insisted that Nokia would succeed with its strategy of transforming itself from a mobile manufacturer into a supplier of services on handsets, such as maps and music. Nokia is the world’s largest maker of smartphones — mobile phones that double up as mini computers — but it has been losing market share to rivals led by Apple and Research In Motion, the Canadian manufacturer of the BlackBerry. This week, Nokia will try to inject fresh momentum into its smartphone strategy with the release of a device featuring a Linux operating system. Analysts say Nokia’s Symbian operating system and S60 software, used on most of its smartphones, need an overhaul. Nokia is also expected to unveil plans to sell netbooks, or small, mobile computers. Mr Kallasvuo defended Nokia’s N97 smartphone, the company’s main answer to the iPhone, following criticism by some analysts that it is a poor alternative to Apple’s handset. He said: “We are competitive in the marketplace right now as we speak, and we will make efforts to be even more competitive going forward.” Apple’s rapidly growing strength as a mobile phone maker is underlined by its securing the second largest share of the industry’s profits in the second quarter. In the three months to June 30, Apple took 23 percent of the leading handset makers’ operating profits, compared with 2 percent in the same period last year, say Bernstein analysts. Nokia’s share of profits is falling because of the recession as well as its weakness in smartphones. Nokia secured 28 percent of the top handset makers’ operating profits in the second quarter, down from 59 percent in the same period last year. Apple’s position highlights how sophisticated, higher priced smartphones such as the iPhone are the source of the best profit margins in the mobile industry.