Sounds like war as iPhone faces rival

NOKIA is preparing to spoil the Silicon Valley party as the mobile phone giant takes full advantage of a surprising but significant blip by Apple in rolling out fresh supplies of its much-lauded 3G version of the iPhone.

Apple appears to be a victim of its own commercial success and it looks like some will have to wait until December to buy their new iPhone.

Both O2 and Carphone Warehouse stores have repeatedly sold out since the new iPhone was launched simultaneously in 21 countries on July 11, when one million sets were sold in the first three days of launch.

O2 says it is urgently trying to clear its backlog of orders for the device.

Adding to the confusion, many customers awaiting an iPhone upgrade are having to wait even longer. Apple is working hard to provide a pay-as-you-go rather than pure contract deal.

Two months is a long time in mobile phone development, and the delay is music to the ears of Nokia, still the world's largest mobile phone maker, and it has now rushed out its own new touchscreen.

It uses a music service called "Comes with Music", and word in the Valley is that the launch plunges Nokia into a frontline battle with Apple, which is used to dominating sales of digital music through its iTunes online store.

Charles Scott, technical director at Quorum Network Resources, an Edinburgh-based IT solutions provider, has questioned the iPhone's tariff costs since its July launch. "Is it the phone that executives will use, with the rest of a company using traditional Windows devices? At an £840 top tariff, what about the general consumer?"

Peter Cunningham, senior analyst at Canalys, claims: "At the end of the day consumers do not care whether a phone is 'smart' or not."

It all depends on the services vendors offer on specific products and how they position and price them.

But the musical element could prove crucial. Cunningham says: "Music is a very popular hobby, and vendors are now banking on the fact that consumers will want this on their phones."

Strategy Analytics reports, according to internetnews.com, that 84% of consumers say they would pay for a service such as Nokia's Comes with Music.

Apple and Nokia have one thing in common, though – they rarely take their commercial eyes off of the 'Crackberry' – Research in Motion's BlackBerry – which has cornered the lucrative business end of the marketplace.

However, RIM's BlackBerry Bold model also continues to be delayed, apparently due to extra testing procedures to ensure it doesn't have the same 3G connectivity problems that plagued the iPhone 3G earlier this summer. RIM's co-CEO is on record as stating that within his company "everyone (here] wants to be sure on every last test".

What is evident is that Nokia is attempting an overall product to eventually compete with Apple, according to Carolina Milanesi, an analyst with Gartner.