Nokia Takes Aim at Apple

Its product-launch offensive includes a new Nokia netbook, handset, and tablet PC that seem squarely aimed at Nokia's top rival

By Jack Ewing and Olga Kharif

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Nokia (NOK) has seemed determined recently to remind the world that it, not a certain Cupertino (Calif.) rival, is the world's dominant handset maker. In the space of four days, the Finnish company, which accounts for 37% of global mobile-phone sales, announced plans for a netbook computer, unveiled a new bargain-priced touchscreen handset, and a high-end "Internet Tablet." Nokia also rejiggered its top management, elevating an executive in charge of user friendliness to the executive board. Finally, the company announced an ambitious effort to offer money-transfer services to the billions of handset owners in emerging markets who don't have bank accounts.

All but the last announcement seemed aimed squarely at Apple (AAPL), whose phenomenally successful iPhone has thrown Nokia off-balance. Although the Apple accounts for less than 2% of the overall handset market, its iPhone has stolen share from Nokia in smartphones, the market's sweet spot. Sales of high-end gadgets with computer-like capabilities grew 27% in the second quarter, according to market watcher Gartner (IT). That comes as the overall market for mobile handsets fell 6% over the same period. Gartner says Apple's share of the smartphone market soared to 13% from 3% in the second quarter of 2009 from a year earlier, while Nokia's slipped to 45% from 47%. (Nokia counters that it recently has regained share.) Apple declined to comment for this article.

Nokia Chief Executive Officer Olli-Pekka Kallasvuo denies Apple is driving the company's strategy. Rather, he says, Nokia is aiming at totally new markets as the mobile-handset business shifts from hardware to a greater focus on such services as games, music, and navigation. "It's not simply fighting against your competitors like Apple, it's claiming new ground. It's claiming no-man's land," Kallasvuo told BusinessWeek on Aug. 27.

Still, the unprecedented flurry of announcements signaled that Nokia is going on the offensive after a long period when Apple seemed to dominate industry buzz. More major announcements are expected on Sept. 2-3, Nokia execs say, during the annual Nokia World extravaganza for analysts, press, and business partners in Stuttgart. "We are on the attack," says Nokia Executive Vice-President Anssi Vanjoki, who oversees global sales. "We had a more peaceful moment, and now we are really aggressive."

Booklet 3G Preempts Apple's Tablet

One example is Nokia's so-called Booklet 3G netbook, which the company announced on Aug. 24. The mini laptop, which will feature 12 hours of battery life and the ability to connect to broadband mobile networks, is partly an answer to PC makers such as Acer and Dell (DELL), which are eyeing the mobile market. But Nokia's Booklet, which will use the Microsoft Windows operating system and Intel chips, similarly preempts Apple's rumored release of a tablet netbook by several months.

By launching the Booklet 3G six months or so before Apple's expected offering, Nokia has a chance to exploit its connections with telecom operators and redefine the market. "When Apple announces its first version, Nokia could announce a second version," says N. Venkat Venkatraman, a professor at Boston University who follows the technology industry.

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