Nokia Can Still Crunch Apple In Emerging Markets

LONDON - IPhones fell from the sky in high-growth and emerging markets on Friday, as Apple's signature mobile phone launched everywhere from Central and Eastern Europe through to India and the Philippines. But even though Apple has made strides in its business model, opening up to multiple network operators and showering users in applications, it will find it tough to crack Nokia's dominance.

Nokia has a 54.6% share of the market in India, thanks to its broad and affordable range of models, and fresh competition from Apple in the high-end segment will do little to displace it. CCS Insight analyst Tom Byrd told Forbes.com that the iPhone's high price point meant it would only really appeal to a small slice of emerging markets, and that it had little technological superiority to boast about when compared with Nokia's upcoming N96 model--the touch-screen notwithstanding.

Shares of Nokia rose 3.2%, or 55 euro cents (81 cents), to 17.53 euros ($25.95), at the end of trading in Helsinki on Friday.

"The total cost to acquire a 3G iPhone is rather high," said Jan Ihrfelt, analyst with Swedbank, who recommended buying Nokia shares on Friday. "The upfront payment is not high, but when you combine it with the total subscription package, it is still clearly a high-end product."

Apple's iPhone launch in India, the Philippines and seven countries across Europe including Poland and the Czech Republic on Friday did not quite have the same effect as when it landed on European shores for the first time last year. (See "iPhones Land In London.") The Associated Press even reported on Friday that the Polish mobile network subsidiary of France Telecom (nyse: FTE - news - people ) had hired fake actors to stand in line for the iPhone, apparently to "warm up" the atmosphere.

Although Nokia (nyse: NOK - news - people ) has not yet released its fabled "iPhone killer," which most sharp-eyed cinemagoers will have seen in the new Batman movie, the Finnish handset-maker is adamant that it will be released in the next four months. A spokesman for Nokia told Forbes.com that it would be a "mid-range" product, and therefore cheaper than the iPhone.

But Gartner analyst Carolina Milanesi still believed Nokia would have to pay close attention to the iPhone's success with application downloads and with its user interface. Although Apple (nasdaq: AAPL - news - people ) is only targeting sales of 10 million units for the whole of 2008--whereas Nokia sold 437.1 million units worldwide last year--the mighty Finns will have to make sure their future offerings surpass Apple's in terms of sleekness and ease of use.