Nokia bolsters phone lineup

STUTTGART (Reuters) - Nokia on Wednesday bolstered its smartphone line-up to better compete with Apple and said a $820 laptop will lead its foray into the fiercely-competitive PC market.

The new handsets -- including its first phone using Linux software -- are the latest moves by the Finnish firm to match Apple's innovation in a sector switching focus to services and software, but left market-followers unimpressed.

"Nokia has major challenges on developing user experience, and we might have to wait for a significant improvement until the second half of next year," said Jari Honko, analyst with eQ Bank in Helsinki.

Nokia's offering in the top end of the market worries investors as the firm has rapidly lost market share in the most profitable part of the industry to Apple and RIM.

"We are fighting back. We are on attack," Anssi Vanjoki, head of Nokia marketing, said in a speech.

Nokia unveiled three new phone models and announced further details of its new Booklet 3G, its first laptop.

GETTING INTO PC INDUSTRY

Nokia has seen its profit margins drop over the last few quarters as handset demand has slumped, and analysts have worried that entering the PC industry, where margins are traditionally razor-thin, could further depress earnings.

But Gartner analyst Carolina Milanesi said Nokia had no choice.

"Nokia had to do it. You see more and more PC guys getting into the mobile operators' shelves. It's kind of the counterattack, it's not just defensive," Milanesi said.

John Hwang, the head of Nokia's laptop business, said the company aims to bundle laptops with Nokia's new Internet services to better compete with rivals offering just hardware.

With the move into laptops, Nokia is crossing the border between two converging industries from the opposite direction to Mac-maker Apple, which entered the phone industry in 2007 with the iPhone.

Following Apple, Acer and Asustek have also jumped from PC world to cell phone industry.

"We are witnessing a sizeable shift in the overall industry. No one feels considerably safe," Nokia's Hwang said in the interview.

In the laptop business Nokia will face new rivals like HP, Dell and Acer, and some commentators said the market -- from which IBM pulled out in 2005 -- could be too tough to crack.

At the same time Nokia's history has been marked by major steps from one industry to another. In the early 1990s it sold most of its units, including those making rubber cables and home electronics, to focus on telecommunications.

Nokia said its new top-end N900 phone will sell for 500 euros ($711.9). The phone, which has computer-like functions, is the Finnish firm's first phone to use Linux software.

The unveiling of the phone last Thursday helped to lift its shares 11 percent for the week.

Nokia has been looking for business opportunities in offering services like music downloads or games to cell phone users as the handset market matures, but so far its offerings have had limited traction.

Nokia also on Wednesday announced a new Lifecasting service -- follower to its similar Lifeblog and LifeVine services -- that will link Nokia phones' location and media data to Facebook, and allow people to update their location and status directly via a Nokia Ovi account.

The first phone to support the service will be the N97 mini, which will start shipping to retailers in October.

"This deal sees Nokia catching up with rivals such as Apple and RIM. The big win is getting the Ovi brand and its Maps service featured on Facebook," said Paolo Pescatore, an analyst at CCS Insight.

Nokia shares were slightly down in the wake of the announcements at the "Nokia World" event in Stuttgart, having fallen 0.9 percent at 9.34 euros at 1406 GMT but outpacing a 1.2 percent weaker Dow Jones Stoxx Technology index.

(Additional reporting by Brett Young in Helsinki; editing by David Cowell and Rupert Winchester)