Nokia today announced their much anticipated digital music strategy. It centres upon strong integration of four new music focused mobile handsets (N81, N95 8GB, 5310 and 5610) and a proprietary digital music store which can be accessed both by PC and mobile. Also included is a PC only streaming music subscription service. Nokia aims to become a key player in the European digital music, which will total € 2.2 billion in 2011 of which 36 percent will be mobile Over-the-Air (OTA).

So was it worth the wait? Well the devices were, the latter two Xpress Music devices in particular from a music perspective. The three way sync is also a nice, innovative alternative to dual delivery. But beyond that, the music service is a disappointment. The music subscription service is a PC only streaming service that does not support portable downloads and as such is a generation behind current offerings. And it begs the question, why is a mobile handset manufacturer launching a music subscription service which does not support portable downloads or mobile streaming? Similarly the download service is essentially a ‘me too’ offering, based around 99 cents, windows DRM wrapped single track downloads. As such it competes with over 280 other European digital music services which can theoretically stake claim to an average of just €1.1 million in revenue each…but of course Apple has a majority market share so the actual revenue share is even lower.

In short, Nokia has great potential, backed up by great devices but the current music service is competing in an overly crowded market place that is dominated by Apple. To compete effectively, Nokia needs to differentiate. They also face the hurdle of overcoming mobile operator concerns: Nokia’s music service is a disruptive, competitive threat to European mobile operators’ nascent OTA offerings. Nokia theoretically sits at a unique intersection of mobile and PC, but this current implementation of the music offering risks placing them in digital music no-man’s-land. Nokia have massive opportunity, I genuinely hope they seize it and make their music offering rise to the high standard set by their great music phones.

So what can they do? Well one or more of the following would be my preference:

• DRM free
• Unlimited mobile subscription (perhaps bundled into mobile subscription fees in partnership with operators)
• Ad-supported free downloads

We’ll have a report on this published very soon with more details, so watch this space.

In the meantime if you are a Jupiter client and what to talk to an analyst to understand what Nokia’s announcements mean to you then please email your client services manager.

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