Nokia Takes Aim at Apple

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Nokia still must convince skeptics that the Booklet can set itself apart in the already crowded netbook field, much less dazzle users in comparison with Apple's forthcoming product. "It's a very interesting introduction, but there are a lot of big questions," says Bob O'Donnell, a vice-president at market watcher IDC. Nokia plans to unveil more details about the Booklet, including the price, in Stuttgart on Sept. 2.

Both Nokia and Apple are ranked among the world's most admired companies. Still, many analysts doubt Nokia can compete with Apple in the markets that its U.S. rival chooses to attack. Charlie Wolf, a senior analyst at Needham & Co., says Nokia's Ovi services portal is not nearly as popular in major markets as Apple's iTunes. "Nokia is not a software company. Apple is a software company, and what distinguishes the iPhone and the iPod touch is their software," Needham says. "I think Nokia is just on the losing side."

bargain-priced smartphone

Nokia, which has a history of bouncing back from setbacks, recognizes that it needs to be more like Apple by designing easy-to-use products, not ones merely stuffed with the latest technology. In response, the Finnish company said on Aug. 27 that it will appoint Alberto Torres, a 44-year-old former McKinsey & Co. principal, to the management board as head of a new solutions unit. CEO Kallasvuo said Torres' mission is to make Nokia devices work more seamlessly with software and services. "The user experience is No. 1 in the marketplace," Kallasvuo said — though he chafed at the suggestion that Apple represents the gold standard. "The gold standard has to be beyond that," he added.

Another riposte to Apple is the 5230 touchscreen handset, announced on Aug. 25. The device offers an array of smartphone features for the bargain price of $210 before operator subsidies. The handset will include GPS navigation, 33 hours of music playback, and the ability to access Internet services such as Facebook. It will ship in the fourth quarter of 2009.

nokia's global advantage

The 5230 is aimed partly at emerging markets where middle-class users can't afford iPhones or where Apple simply isn't present. Nokia, still king in countries like India and regions like Africa, plans to exploit that dominance. Yet another initiative, announced on Aug. 26, aims to offer basic banking services to mobile-phone users. According to Nokia, 4 billion people have mobile phones, while only 1.6 billion have bank accounts. Mobile money-transfer services already are available in countries such as Kenya, where they have been a huge success.

Nokia, with its global distribution, may be the only company capable of spreading such services around the world. "If you want to do something like this you need a company that has the market share Nokia has and the presence Nokia has in emerging markets—and also a brand that consumers trust," says Carolina Milanesi, an analyst at market watcher Gartner.

Nokia also is positioning itself as something of the anti-Apple in its approach to software developers. In contrast with its American rival, which maintains tight control over the software in its products, Nokia has begun to encourage users and developers to fool around with its operating systems. "When one person or one entity controls all the elements, it limits innovation," says Executive Vice-PresidentVanjoki, in a jab at Apple. "History shows that competitors who behave this way never make it to the big leagues in terms of how many people are using their products globally."

Ewing is BusinessWeek's European regional editor. Kharif is a senior writer for BusinessWeek.com in Portland, Ore.

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