Nokia Breaks Ranks With Network Operators, Targets iPhone/iTunes

One of the arguments that pundits use to explain Apple’s success, first with the iPod/iTunes combination and now with a similar iPhone/iTunes combo, is that Apple is able to control the experience because it owns the ecosystem. This "walled garden" approach, known in supply-chain parlance as vertical integration and used in everything from cable TV systems to Land Rover vehicles and spare parts. It’s also a level of integration (or, some would argue, near-monopoly) that many companies aspire to.

Nokia’s acquisition of Loudeye last year raised the possibility that the handset manufacturer might be looking to create it’s own "walled garden" in much the same way Apple has. Nokia launched its online music portal—dubbed Ovi—at a gala bash last night at London’s Ministry of Sound. For those old-timers in the audience, you might remember this as the place that the official event party was held for Streaming Media Europe back in the day.

Ovi completes the pieces, with the exception of integrated software, that allow Nokia to compete with Apple. The announcement of hardware at yesterday’s event, including an updated N95 with a 5 megapixel camera and 8GB of RAM, allows Nokia handset users to "find, buy, manage, and play music and games purchased from the Nokia Music Store [of which Ovi is the front-end web portal] and N-Gage games service," according to a press release

The N81 8GB is perhaps the handset most directly positioned to challenge the iPhone. Sporting a 3.5 mm headphone connector, 3G and WLAN connectivity, the Nokia N81 is dubbed as a "multimedia computer" and contains specifications that the current iPhone doesn’t possess, although Apple is rumored to be releasing a 3G phone in Europe sometime in the fourth quarter of 2007, around the same time the N81 is set to ship. Street price is even the same, with the Nokia N81 8GB expected to retail for around 430 Euros.

Nokia is taking its hardware integration with the Nokia Music Store a step forward, allowing Nokia handset users to download music directly to their phones and then transfer those songs to their personal computers. Apple has been asked to take the iPhone to this level but as of yet has not provided this capability; both Nokia and Apple allow users to move content the other way—from their personal computers to their mobile devices.

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