Nokia Prepares to Unveil 'Apple iPhone-Killer' Smartphone at Nokia Mobile Event

BARCELONA (Reuters) - World mobile phone leader Nokia is expected to bolster its offering of high-end phones at a media and industry event in Barcelona on Tuesday, where it is also due to outline a push into Internet services.

Nokia still dominates the market for smartphones -- handsets with computer-like features such as e-mail -- but sales dropped in the third quarter from a year earlier and it lost share to Apple and Blackberry maker Research In Motion (RIM).

"I'm sure there will be a few new phones shown on Tuesday and Wednesday, something in the smartphone and touchscreen area," said Handelsbanken analyst Jan Dworsky.

The battle for smartphone business has heated up since Apple introduced the iPhone last year, with all vendors trying to grab a bigger slice of a market that is seen growing despite the backdrop of economic gloom.

"Smartphones should be a better-performing segment than others in 2009, even though growth will slow down versus 2008," Dworsky said.

While growth in the total mobile phone market slowed to just 3 percent in the third quarter, the smartphone market grew 28 percent from a year earlier to 40 million phones, according to research firm Canalys.

Surging demand for the latest iPhone and Blackberry models helped Apple and RIM to win a larger share of the smartphone market in the third quarter.

"Apple has redefined the whole category," said Sean Dalton, general partner at Highland Capital Partners, stressing the easy functionality of Internet use on the iPhone.

"I think the smartphone market really is two markets: In one there are two players: Apple and RIM. The other market is everybody else. No one of them has materially differentiated," Dalton said.