Nokia Girds for Battle With Apple, RIM

Nokia is cutting 450 employees in an effort to refocus Ovi, its mobile phone services unit.
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Updated from 10:30 a.m. EDT

Nokia

(NOK) - Get Report

said it was cutting 450 employees in an effort to refocus Ovi, its mobile phone services unit.

The move comes as Nokia tries to defend its lead in smartphone sales against

rising stars

Research In Motion

(RIMM)

and

Apple

(AAPL) - Get Report

.

After four years and billions spent on building Ovi through the acquisition of GPS mapper

Navteq

, social networking site

Twango

, online music store

Loudeye

, and email shop

Intellisync

, Nokia says it's now ready to put the service to work. The Finnish phone shop has also stressed that third-party developers will be encouraged to write applications for the Ovi site.

Nokia hopes Ovi users will store files, buy songs and maps, sync contact lists -- in other words, be a hub for smartphone services, similar to Apple's iTunes and MobileMe and RIM's BlackBerry apps and email services.

"Nokia intends to take RIM head-on, and we believe, could possibly use price, brand, distribution and scale to recover lost ground in smartphones from RIM," JPMorgan analyst Ehud Gelblum wrote in a note Tuesday after an interview with Nokia CFO Rick Simonson.

Just as RIM and Apple have targeted the consumer market with new services, Nokia is prepared to take that attack even further.

"Nokia plans on driving email and all smartphone features all the way down into the midrange and low end, all but to the ultra-low end by using its scale," Gelblum writes.

Other smartphone players are aimed for the same target, or perhaps a little lower.

Motorola

(MOT)

, using

Google's

(GOOG) - Get Report

Android operating system, hopes to have

mid-priced phones

available later this year. And

Palm's

(PALM)

upcoming

Pre phone

, according to at least one analyst, could be sold by

Sprint

(S) - Get Report

for $150, a big $50 below Apple's iPhone.

Analysts see an opportunity for Nokia to exploit its industry dominance across a range of products.

"Nokia is trying to execute a pincer move on the iPhone and Samsung," says Global Crown Research analyst Tero Kuittinen. "The goal is to undermine them with notably cheap smartphones like the 5800, while also doing smartphone-netbook hybrids at the high end with 4-6 inch displays."

Nokia was two years late to touchscreen trend and is still sputtering on the Ovi front after four years of building the services store. Strangely, thanks to all its missteps, Nokia is now seen as something of an underdog in a hotly competitive smartphone war.

Nokia shares were recently down 2.1% to $13.20.