THE BUZZ around mobile-phone maker Nokia is unmistakable, like a ringtone breaking the quiet of a church service or a cinema screening.

While rivals, notably Motorola, are foundering, the Finnish giant’s market share passed 40% at the end of 2007 and could already be closer to 42%, say analysts. Either way, chief executive Olli-Pekka Kallasvuo is hungry for more.

Nokia sold 437m phones last year, 26% more than in 2006 and almost as many as its four nearest rivals - Samsung, Motorola, Sony Ericsson and LG - combined. Stripping out handsets lost to sock drawers and rubbish bins over the years, there are now one billion Nokia phones in use around the world – one in every three. And Nokia’s lean logistics system means it swallows up 70% of the profit from phones sold by the big five.

Exciting stuff. In fact, perhaps the most boring thing about Nokia is its phones. After forays into wacky designs and flip-open phones, it is still best known for its trademark easy-to-use block handset that can be mass-produced cheaply and shipped in giant volumes into new markets such as China and India. No wonder it can make a profit from phones that sell for only £20 in those markets.

To increase its domination, Nokia need only hold its share in countries such as China, where 7m new customers are signing up every month.

After years of resisting the idea of tailoring its phones to meet American operators’ specifications, Kallasvuo has also made concessions to AT&T and Verizon to reverse its one global weakness, America.

Charles Dunstone, chief executive of Carphone Warehouse, said: “They [Nokia] make good-value, well-specified phones. The last half of last year they had a really good, reinvigorated range.”

It is a far cry from early 2004, when Nokia’s market share tumbled to 29% because of the soaring popularity of Motorola’s slimline Razr.

Now, Motorola is in strife. It ran out of sexy designs and shed half its market share in the first six months of 2007. Chief executive Ed Zander was dumped, too.

As one rival has faded, another is burning bright. But for all the fanfare around Apple’s iPhone launch, it seems destined to be a niche product against Nokia’s volume game. Apple sold 3.4m phones in the first six months since release, a drop in the ocean compared with the traditional handset makers. But it did take an instant 20% share of America’s market for “smartphones”, the high-end, internet-enabled mobile computers like the Blackberry and Nokia N-series.

Apple’s European boss, Pascal Cagni, concedes it may struggle to take such a large slice here. But its market entry shows the industry will be about more than just box shifting in years to come. It has to be. Growth in the total volume of mobile phones being shipped is finally slowing, to some 10% this year – 1.25 billion units – compared with 17% growth in 2007.

For Nokia, keeping margins up is also a battle. The average selling price of a handset fell 10% to £64 last year, due to its sales to emerging markets.

All this explains Nokia’s latest push into software and internet services. It may claim to sell more computers, portable music players and cameras than anyone else, but securing a steady income stream from them is another matter. Nokia sold 200m camera phones and 146m music phones last year, against some 52m iPods sold by Apple.

The Finns paid $8.1 billion (£4.1 billion) last autumn for Navteq, which creates digital maps. Nokia is conscious it should make more of the fact that location services – such as finding the nearest pub – should be easy on a device that consumers carry all the time.

Music is also a feature. Nokia Music Store lets users download any of 2m songs via a pay-per-song system. Beyond that, Comes With Music offers a year of unlimited downloads from Universal’s catalogue free.

The company has launched Ovi as its online platform and hopes to persuade operators to sign up to it. A similar attempt, called Club Nokia, bombed several years ago. This time, though, operators are more willing to share income streams rather than lose them altogether.

“We don’t believe the revenues from services will be huge,” said Richard Windsor, a Nomura analyst. “We think that if services are successful, most of that success or value will be felt through higher device prices.”

That would suit Kallasvuo nicely.

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