If any company has the chance to take on the Apple (AAPL) iTunes/iPod franchise it is Nokia (NOK). It has started its own music store and recently signed up Warner Music (WMG).
According to the FT, "Warner’s participation means Nokia, the world’s largest mobile phone maker, has enlisted three of the four largest record groups,"
Nokia controls 40% of the global market in handsets, selling over 400 million units per annum. That gives it a significant amount of leverage in terms of what software and services run on its phones. The company has decided that as the price of handsets drops, being in the business of providing wireless customers with products like music downloads is a way to keep its profits up.
Apple iTunes already has 75% or more of the digital music distribution business. With that high ground, it may never be dislodged. Nokia could move into a strong second place. But, for a company its size, having 10% of the market does not do it much good.
Nokia is better off trying to build its own iPhone. At least Apple does not have a huge advantage in the handset business. Yet.
Douglas A. McIntyre
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