By Michal Lev-Ram

Apple’s iPhone may reign over the fledgling mobile music market in the United States, but in the rest of the world Nokia is No. 1 on the hit parade.

Last year alone, Nokia (NOK) sold 147 million music-playing phones worldwide, while Apple’s (AAPL) sleek touchscreen has sold 5.7 million units so far this year. And although the iPhone is now the top-selling music phone in the U.S. market, it doesn’t even make the top five in Europe where three of Nokia’s music-playing handsets are best-sellers. Now the Finnish phonemaker plans to launch a new service later this year that will let people download as many songs as they want for a limited time.

Unlike the iPhone’s pay-per-track model, Nokia’s new “Comes With Music” plan will offer several handsets that include a year’s worth of unlimited music in the cost of the phone. Once the year is over, subscribers will be able to keep their existing tracks on their phone or PC, and Nokia says they’ll have several options of extending their “Comes With Music” membership without necessarily having to upgrade to a new device. The company is still mum on what those other options may be, though it’s likely customers will have to start paying a subscription fee to keep the unlimited downloads service.

“The track-by-track purchase methodology was cumbersome to people,” says Liz Schimel, head of Nokia’s music business. “Consumers were looking for a more seamless way to access a lot of content.”

Subscription-based, all-you-can-listen-to digital music models have been around for a while. Companies like U.K.-based Omnifone and Rhapsody offer similar services and for years rumors have circulated that Apple itself will launch a flat-rate, unlimited version of iTunes. But Nokia is the first mobile giant to turn away from the a-la-carte model of selling mobile music, and, unlike other existing subscription-based services, its will allow people to keep their tunes on their phone and PC even after their subscription expires.

Of course, while customers won’t have to worry about losing their music library, they also won’t be able to transfer their songs to a new device unless that new device is another “Comes With Music” Nokia phone.

The company plans to launch several compatible handsets, as current Nokia music phones won’t work with the upcoming service. It’s not clear how much built-in memory those new phones will have, but one of Nokia’s most popular multimedia phones on the market today is the N95, which, like the iPhone, comes in an 8-gigabyte version.

Lucky for the Finnish phonemaker, analysts say content providers are eager to experiment with new ways of getting their music onto cell phones.

“They [content providers] want to at least try to shift the center of gravity away from iTunes and Apple,” says Mark Donovan, a senior analyst with mobile research firm M:Metrics.

Two of the world’s largest music labels - Universal Music Group and Sony BMG - have already committed to “Comes with Music,” and the company expects more will sign on before the new service launches in the second half of this year.

Nokia won’t disclose the details of the new business model, or say how much the “Comes With Music” devices will cost. Some media reports have suggested the phonemaker is paying $35 to Universal alone for each handset it sells. With more labels expected to join the partnership, that could end up cutting into Nokia’s profit margins, though M:Metrics’ Donovan says he believes the company has figured out a model “that has legs.”

“The idea that they would pay Universal $35 a handset doesn’t smell good to me at all,” says Donovan. “But of course the devil will be in the details.”

Schimel, head of Nokia’s music business, says the company put a lot of energy into crafting a model that makes sense for everyone involved - the music labels, customers, carriers and Nokia itself. The result, she says, will be able to compete with lots of players on the marketplace, including Apple.

“The mobile industry as a whole has enormous potential in digital music but up until now it’s only been unlocked to a limited extent,” says Schimel, who would not disclose the specifics of the “Comes With Music” business model.

One thing Nokia has been clear about is that music and other services are an important part of its overall strategy. In 2006 the company acquired digital music player Loudeye, which enabled it to launch a pay-per-track mobile music store (similar to what’s currently available on the iPhone), now available in nine countries.

But it’s Nokia’s “Comes With Music” service that has the potential to disrupt the prevalent iTunes way of selling digital music - at least when it comes to mobile downloads.

Despite Apple’s dominance in MP3 player sales, Nokia’s got a global headstart when it comes to the mobile phone market. It’s got 40% of the global handset market and is especially strong in regions that have been quick to embrace mobile content, including China and Europe.

Of course, providing a viable competitor to Apple’s iTunes means succeeding in the U.S. market as well. Currently, Nokia has just 7% market share in the United States, and its total North America sales accounted for only 2.6% of its overall, global revenues.

Nokia’s Schimel says although it won’t be one of the launch markets Nokia has every intention of eventually bringing its “Comes With Music” service to the United States.

But it’s possible Apple will be pressured into change its tune — and offering a subscription-based iTunes service — long before that happens.

By Michal Lev-Ram

LAS VEGAS — At a moment when Yahoo desperately needs to wow investors, the company unveiled a handful of enhancements to its mobile search service that are also being offered by rivals Google and Microsoft.

The announcement, made Wednesday at the CTIA wireless show in Las Vegas, includes a new voice-enabled search function that allows consumers to look up restaurants and websites by speaking into the phone. This could be a useful feature for people without QWERTY keypads on their phone, or for those who want to look up information while driving. The only problem is, Microsoft (MSFT) already offers a similar application on its Live Search mobile service.

Yahoo (YHOO) says its new voice recognition feature can adapt to a user’s voice over time and is now available for download on select Blackberry devices, including the Pearl and Curve. More compatible devices will be added in coming months.

Yahoo also unveiled a search box that will sit directly on a phone’s homepage, which will allow users to look up whatever they want without having to open their browser — a feature similar to a Google (GOOG) software “shortcut” for cell phones launched just last month.

On top of these features, Yahoo also plans to offer a downloadable application that tries to predict a user’s search as he or she starts typing. This is similar to the search assist function on Yahoo’s online homepage (accessible on a PC) but is the first such feature to become available on a mobile device. In other words, Microsoft and Google aren’t one step ahead on this one. Yahoo says its new recommendation tool can cut down on the amount of time it takes to conduct a search from a cell phone. Currently, this function is only available on Apple (AAPL) iPhones, which come loaded with Google applications like YouTube videos.

The new enhancements to Yahoo’s mobile search application will likely make it a smarter, faster and easier to use service. But, with the majority of the just-announced updates already available from the company’s rivals, it’s unlikely it will be enough to significantly differentiate Yahoo and deliver the much-needed pizazz investors are looking for as the company tries to fend off a takeover bid by Microsoft.

By Michal Lev-Ram

LAS VEGAS — While Apple’s iPhone wants to attract business users, Microsoft is desperately trying to move away from its “all work and no play” image.

On Tuesday the Redmond-based company unveiled an updated version of its mobile operating system that it hopes will make it more attractive to everyday consumers. Among the new “consumer-friendly” features on Windows Mobile 6.1 is easier navigation capabilities, an enhanced Internet Explorer mobile browser that lets users zoom in and out of pages and “threaded” text messages (which means users can keep track of texts to and from a particular contact like a chat conversation, a feature operating systems like the Palm OS have had for years).

Microsoft (MSFT) says it is determined to become the operating system of choice for both work and play. Its new Windows Mobile takes a few steps in the right direction, but it will take a lot more than a handful of minor upgrades for the company to change its all-business image. Unlike Apple’s (AAPL) iPhone, which is known as a consumer and entertainment-driven device, Windows Mobile phones have traditionally been geared for the corporate world.

Speaking at the CTIA wireless trade show in Las Vegas on Tuesday, Robert Bach, president of Microsoft’s entertainment and devices division, said he thinks that the company’s reputation as a “mobile solution for people at work” is changing.

The software giant’s Windows Mobile platform already powers a variety of smartphones like the Motorola (MOT) Q and Samsung’s Blackjack, and is on track to sell 20 million devices running on its operating system this year, according to the company. But using most of these phones feels more like using a mini version of Windows on a PC than playing around with an iPhone, the new poster child for consumer-centric cell phones.

Microsoft is making some headway into the non-business market, though it’s unclear whether this is a direct result of changes to its own software.

For the first time, music-phone maker Sony Ericsson is coming out with a Windows Mobile device. The new Sony phone has a much slicker look and feel than most Microsoft devices, but that’s because its Xperia X1 has a software “layer” that runs on top of Windows Mobile and allows for nine customizable panels to appear on the home screen, similar to the small icons on the iPhone interface. The upcoming smartphone, which won’t be in stores until the second half of 2008, is also a touchscreen device — a category that has been a big hit among consumers since Apple’s iPhone came out last year.

Microsoft is making other advances on the consumer front. The company recently bought Palo Alto, Calif.-based Danger, maker of the consumer-friendly Sidekick, which is sold by T-Mobile. But it’s not yet clear how the acquisition will play into Microsoft’s overall mobile strategy.

Of course, Apple has its own challenges convincing IT managers that its device is secure and practical enough for the corporate world. Which raises the question: Can one phone be all things to all people?

Microsoft seems to think so. Unlike Apple, its operating system runs on a variety of phones made by a variety of manufacturers, though currently most of these phones fit into the same business category. If the company wants to become all things to all users — if that’s even possible — than it will likely take more than new zooming features on its mobile Internet browser.

By Michal Lev-Ram

Long before it unveiled its Android operating platform, Google had its eye on the mobile market, an industry that reaches an estimated three billion people worldwide. The company’s main strategy? Pushing search, maps and e-mail onto cell phones in the hope of becoming the leading source of information — and ads — on the tiny screen.

Now Google (GOOG) says its efforts to make mobile services faster and easier to use are paying off. On Wednesday the company released new numbers showing mobile Internet activity on select devices recently surged, following its release of a software “shortcut” that reduces the time it takes to conduct a search on a cell phone.

“We’ve long known that fast is better than slow,” says Matt Waddell, project manager for Google’s mobile division. “But when it comes to mobile fast is much better than slow.”

Google says users of its recently released shortcut — a small piece of downloadable software that installs a search box directly on a cell phone’s home screen — conduct 20% more mobile Web searches than previous users. The shortcut allows people to type a keyword right on their phone’s home screen to initiate a query, rather than having to first find and open their mobile browser and type in the URL of their preferred search engine.

The shortcut was made available to BlackBerry (RIMM) and Symbian devices in recent months, but Google says it will also work on Windows Mobile phones like Motorola’s (MOT) Q and the Touch by HTC starting Wednesday. The company also credits “time-saving fixes” for a recent uptake in Gmail use on the Apple (AAPL) iPhone.

According to research firm M:Metrics, the iPhone, which offers several of Google’s mobile services, is the most popular device for accessing news and information on the go. Nearly 50% of iPhone users accessed a social networking site in January, about twelve times the market average. And about 31% watched online TV on their device.

“This data indicates that the iPhone’s widgets [small applications accessible from the phone's home screen] are an effective means to drive mobile content consumption,” Mark Donovan, senior analyst at M:Metrics said in a statement. “Beyond a doubt, this device is compelling consumers to interact with the mobile Web, delivering off-the-charts usage from everything to text messaging to mobile video.”

But M:Metrics also found that iPhone users are more likely to earn more than $100,000 than the average mobile subscriber. That means that, despite Google and Apple’s efforts to make the mobile Web simpler and faster to use, it will likely take a long time for it to reach mass appeal with average consumers — those who earn far less than $100,000 a year. According to a recent Jupiter Research report, 25% of U.S. cell phone owners currently browse the Internet from their devices, while just 16% say they do so frequently.

By Josh Quittner

The Macbook Air notwithstanding, the most interesting part of this year’s Macworld was that all the interesting stuff was leaked well in advance. This has rarely happened before.

Steve Jobs takes secrecy at least as seriously as he does clean design. I remember being rousted out of bed by an irate phone call from Jobs at midnight, the night before a Macworld where he was to launch the snowball iMac. I had written the cover story on that Mac for Time Magazine, and it was inadvertently published overseas on a time.com website. Ooops. We got it down, but the damage was done, and I was told later that Jobs was so upset, at one point, he wanted to call off his Macworld address.

Jobs couldn’t be happy that Wired had the high points right about the world’s thinnest laptop yesterday. And I’m sure he was displeased that details about Apple (AAPL) getting into the movie rental business had begun slipping out a month ago.

In fact, if you read any of the top Apple fanboy sites, it was pretty clear that the Good Ship Apple was leaking all over the place. Naturally, as is typical in such cases, bloggers were taking great pains to claim that their predictions were based on intelligent “tea-leaf reading,” as opposed to reliable tips. Given Apple’s track record of shutting down unauthorized fan sites, I would, too.