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Nokia acquisition of Loudeye might speed up Apple iPhone development

August 16, 2006

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Recent news of Loudeye’s acquisition by Nokia, the world’s leader in the mobile phone manufacturing segment, has led many analysts to believe it will impact significantly on the other main player on the digital music market, Apple.

It has been speculated for a long time that Apple is working on a mobile phone product to compliment their iPod range of digital music players. The move has never officially been acknowledged by Apple, but many possible designs have circulated the web in recent months. The success of the iTunes model coupled with still dominant market share by the iPod player makes the cross over to mobile communications believable. The entry of Nokia in the digital music segment can now lead to speedier development of the possible iPhone product.

Experts believe that Apple now has reasons to fear Nokia’s entry in their dominated market and launching an iPod in the US market with phone capability might be the best resort to face the emerging challenge.

The surprise move by Nokia was met with conflicting reactions from analysts. On the one hand many considered it a tactic more than a strategic position, while others commented on the fact that with this acquisition Nokia’s competitors on the music market will be forced to react instead of carrying on with their operations as if nothing new had happened – a very uncomfortable position when large financials resources are required to re-design strategies that didn’t take in consideration the fact that a mobile manufacturer could cross over to the digital music business. 

But not all praise the move as a great advance for Nokia. There have been concerns that the manufacturer might be entering unknown territory, since music is not part of the core business of Nokia. On the other hand some draw attention to the fact that many of the mobile operators already have music services established and might not want to sell Nokia handsets if that means direct competition to their own offers.

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