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HELSINKI/LONDON (Reuters) - The scale of the challenge facing Nokia in the all-important smartphones market was underscored on Tuesday when a powerful new handset from Taiwan's HTC overshadowed two new models from the Finnish giant.
HTC, the world's fifth-largest smartphone maker, launched HTC Sensation, offering an entire library of movie and TV shows via a wide screen, with a fast 1.2GHz processor which is particularly important for services such as games.
Nokia, which dumped its once-dominant Symbian software earlier this year after falling behind Apple in the high-end handset market, launched two new models in a bid to stem customer defections while it works on a new offering.
The Nokia phones will run on an improved Symbian software, with new icons, better text input, faster Internet browsing and a refreshed Ovi Maps application, while the company develops its new devices using software from Microsoft.
"The new HTC Sensation phone reflects the mountain Nokia needs to climb to close the hardware and software gap with its rivals," said Ben Wood, research director at CCS Insight.
"On the day Nokia unveils the 600Mhz X7 'entertainment phone' it has been trumped by HTC's Sensation which has a dual-core 1.2Ghz processor".
Apple's iPhone was using 600 MHz processors two years ago.
Nokia's new chief executive Stephen Elop dropped Nokia's Symbian software in February, saying the company would instead use Microsoft's unproven technology, after he described it as a burning platform in a widely leaked internal memo.
Elop said the Symbian technology was no longer good enough for the future of the world's largest phone maker by volume.
HTC unveiled its new handset in London, touting its easy access to content such as movies and more personalized favorites such as photos, updates from social networking sites and stock price changes.
The phone, which will be aimed at the premium end of the market and will compete with the iPhone among others, will use Google's Android software, which ended the 10-year reign of Nokia's Symbian as the pre-eminent smartphone platform.
The phone will also feature HTC Watch, a service that enables users to watch videos from a library of the latest movies and TV shows without having to wait for the content to finish downloading.
The new Nokia models, the E6 and the X7, will go on sale for 340 euros ($491.6) and 380 euros respectively excluding subisidies and taxes, later this quarter.
Part of Nokia's problem has been that for years it struggled to attract developers to build new offerings, due in part to Symbian's cumbersome tools compared to those for the iPhone or Google's Android platform.
It had been hoping its larger scale would compensate for additional investment demanded from developers.
Nokia's services chief Tero Ojanpera stuck to the target of selling some 150 million Symbian phones in coming years, before it winds down their production, and said daily downloads at Nokia's Ovi Store have grown to 5 million.
In comparison, Apple is expected to sell a total of 150 million iPhones in 2011-2012.
"It's just a bit too late to put Humpty Dumpty back together," said Tero Kuittinen, analyst at MKM Partners of Nokia. "Developers are bailing out in droves."
Nokia's weakening position in the high end of the market is expected to drag its underlying first-quarter earnings per share 29 percent below last year's, a Reuters poll of 31 analysts showed on Tuesday.
Underlying operating profit at its key phone unit -- an important metric for the company -- is expected to drop to 8.6 percent from 12.1 percent a year earlier.
Nokia is scheduled to report January-March earnings on April 21, and it has also said it would unveil large job cuts stemming from its Microsoft deal in late-April.
Shares in Nokia were 2.9 percent weaker at 6.11 euros by 1505 GMT.
Editing by Mark Potter