Reuters - Nokia starts roll-out of Apple App Store rival

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Nokia starts roll-out of Apple App Store rival

Monday, May 25, 2009 3:33PM UTC

By Tarmo Virki, European technology correspondent

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.

To cope with slowing phone demand Nokia is building a new business from mobile Internet services -- like games or maps -- but is scaling back separate investment plans due to the slowdown, and focusing on merging the delivery of services.

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.

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.

"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.

After Apple introduced the iPhone in 2007, handset vendor rivals all focused their efforts on building similar, sleek devices with large touch screens -- a situation that is being repeated in 2009 in the rush to build a rival App Store.

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, up 1.3 percent at 10.76 euros at 1501 GMT.

The store will combine Nokia's legacy software distribution channels such as the Download! service, which has been pre-installed on more than 200 million phones. However, only a fraction of those phones have ever been used to buy a program through the service.

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.

($1=.7145 Euro)

(Additional reporting by Brett Young; editing by Simon Jessop)