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Monday, January 17, 2011, 10:25 am PT (01:25 pm ET)

Nokia pulls the plug on its 'Ovi Unlimited' iTunes competitor

Nokia is pulling the plug on its Ovi Music Unlimited service in nearly every market it serves, citing incompatibility with iPods as a key problem.

Nokia originally launched its subscription music service as "Comes with Music," in a late 2007 partnership with Universal Music, Sony BMG, Warner and EMI, using Microsoft's Windows Media DRM.

The world's largest mobile maker hoped to challenge Apple's pay per song iTunes model and take on the iPod with its dominant position in mobiles just as Apple was expanding from the iPod into the mobile business with the then new iPhone.

Nokia phones bundled with the program would receive six, 12, 18 or 24 months' worth of unlimited music downloads, and could play the music on either their mobile or PC using Microsoft's player software. Nokia has promised a Mac version of its Ovi desktop software since 2008, but never delivered it.

The service was slow to catch on, reports the Financial Times, in part because Nokia only used it to attract users to its lower end and middle-tier models, leaving it off its high end devices.

Additionally, its DRM restricted music from playing on other devices, including iPod and Macs. "The markets clearly want a DRM-free music service," a Nokia spokesman said in the report.

Nokia will be discontinuing the service in 27 of the 33 markets it currently serves, leaving just China (where it reportedly doesn't use any DRM anyway) India, Indonesia, Brazil, Turkey and South Africa, where the service had drawn the most interest.

Those countries are among the areas Nokia has held onto as the iPhone has systematically trampled its once overwhelmingly dominant position in smartphones via its Symbian mobile platform (depicted on the map below).

However, analysts say it is likely that Apple will use its new CDMA iPhone 4, initially being launched in the US with Verizon, to enter markets in India and China, which currently provide better CDMA service than they do GSM/UMTS, a problem that has held Apple back from entering those markets previously.

iOS Symbian