Mobile phone companies take the fight to Apple over new apps

The mobile phone trade show kicked off in Barcelona yesterday but industry insiders believe the economic downturn has taken its toll on the showpiece event of the year.

Yesterday saw the opening of the Mobile World Congress, the largest global cell phone exhibition, where the great and the good gather to rub shoulders and show off their latest gadgets.

At last year's conference, in the shadow of Montjuic's Palau Nacional, 55,000 turned up. While the organisers are predicting about 50,000 attendees this year, some of the event's veterans believe the carnage in the financial markets will send the final numbers tumbling further when they are tallied at the end of the week. One said: "The conference is definitely emptier this year. The queues used to snake out round the corner. There isn't quite so much glitz and glamour."

Many of the smaller providers have dropped out as the recession bites, despite already paying the initial charges after last year. "The fee is only half of it, building a stand and manning it is pretty expensive, some have decided just to shelve the whole thing," the source said.

With the keynote speeches not scheduled until today, the conference opened with a series of announcements as rivals jostle to take market share from Apple's iPhone, unveil new partnerships and new devices.

The most eagerly anticipated was that of Microsoft, which officially unveiled the Windows Mobile 6.5 in the afternoon. Its chief executive Steve Ballmer said the new-look phones took mobiles "to another level" and would provide "great end-to-end experiences that span your entire life, at work and at home". The company also announced Windows Marketplace, its own application store, which should be up and running by the end of the year.

They were not the only ones playing catch-up on apps. Nokia announced an apps store of its own, as well as two new phones in the morning.

Nick Jones, an analyst at Gartner, said: "There is a big battle in the mobile space, and apps are just one part of it, but all the big providers do need an app store. It is a good step for both companies."

There were plaudits for Sony Ericsson's new Idou phone, another smartphone looking to take on Apple, launched on the Sunday night. It has the most powerful phone camera ever with 12.1 megapixels, better than many digital cameras. The group has also drawn up a three to five-year business plan dubbed "Entertainment Unlimited" to integrate media from mobile phones, PCs and television.

Orange, which is heavily involved in the Windows phone, also announced its partnership with LG to be network provider for its watch phone, which is expected to be released by Christmas. Users talk via Bluetooth and have access to music, videos and the internet.

Despite the buzz around some of the new releases, the tone of the conference is subdued. Many of the panel debates focus on managing in the current climate. Olli Pekka Kallasvuo, president and chief executive of Nokia, said: "The global device market will contract this year."

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