Nokia starts roll-out of Apple App Store rival

HELSINKI Mon May 25, 2009 10:14pm BST

A test version of Nokia's new Ovi Store is seen in a picture taken in Helsinki May 14, 2009. REUTERS/Tarmo Virki

A test version of Nokia's new Ovi Store is seen in a picture taken in Helsinki May 14, 2009.

Credit: Reuters/Tarmo Virki

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HELSINKI (Reuters) - Nokia on Monday began rolling out its much-anticipated online software and content store, Ovi Store, as it aims to follow the success of Apple's App Store.

Nokia said it had started moving Ovi Store to production servers, preparing for the global commercial launch, and the store was opened to users of a few of its phone models in Australia and Singapore on Monday.

Nokia has promised to open the store globally this week.

The Apple App Store has proved extremely popular, with one billion applications downloaded in less than a year, and operators and technology firms including Vodafone Nokia, and Microsoft now want a piece of the pie.

However, analysts say firms will likely struggle to match the success of Apple's store when creating their own stores, hampered by technical issues, a lack of applications and increased competition.

"Nokia's Ovi store is a step in the right direction but Apple is still the king of the hill when it comes to selling applications," said Ben Wood, research director at CCS Insight.

"The long awaited arrival of Nokia's Ovi Store lacks the blaze of publicity Apple was able to achieve when its App Store burst onto the market -- Nokia is going to have to spend a small fortune on marketing to make consumers aware of what it is offering," Wood said.

Nokia, which made its first ever quarterly pretax loss in January-March, is cutting annual costs at its key handset unit alone by more than 700 million euros ($979.7 million) to counter plunging phone demand.

NOKIA'S COUNTER-ATTACK

To cope with slowing phone demand Nokia is trying to build a new business from mobile Internet services -- like games or maps.

"Ovi Store is in some ways the last castle for Nokia - both N-Gage and 'Comes with Music' are industry laughing stocks," said Global Crown analyst Tero Kuittinen.

Games and music have been spearheads of Nokia's services push, but its mobile gaming offering has had little success, and its much-hyped music offering, which bundles free music downloads with a sold phone, has also found few clients.

Nokia will also sell games and music through the Ovi Store.

"Ovi Store is where Nokia tries to re-group and muster its forces for a counter-offensive," Kuittinen said.

Analysts said Nokia's key opportunity in the battle between mobile software supermarkets lies in the scale of its phone business -- it sells more than 400 million phones a year, compared with Apple's total of some 20 million iPhones.

Gartner's Carolina Milanesi said Nokia has to simplify its offering to consumers, while focusing on the social networking aspects, like friend referral, in the store.

"This is a much better way to help find the right app than the 'top 25' list," she said.

In late April, Nokia said it would have operator billing -- something it expects to boost takeup -- in place in eight countries for its launch, but dropped an earlier goal of including the key U.S. market from the start.

Research firm Strategy Analytics has forecast the value of the mobile content market -- including downloadable games, ringtones, wallpapers, video, mobile TV, text alerts and mobile Web browsing -- to grow 15 percent this year to $62 billion.

Nokia shares rose slightly on the news and closed 1.7 percent higher at 10.80 euros on the Helsinki bourse.

($1=.7145 Euro)

(Additional reporting by Brett Young; editing by Andrea Ricci)

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