Ah, to be a cell-phone maker in the age of the iPhone. At Nokia—which has more than a third of the global market and more customers than its three closest competitors combined—sales targets are down, the stock price has been halved, and the forecast for the year ahead is gloomy. No wonder the Finnish company is determined to be more than a handset maker.

Nokia continues to invest in cell-phone R&D, pursuing the promise of the E71 Smartphone (which came closest to answering the iPhone's design throwdown) and the N97 (which offers 32-gigabyte capacity for media and apps, a 5-megapixel camera, and GPS functionality). But it is the company's increasingly robust Ovi mobile portal that points the way to Nokia's next incarnation: as a one-stop shop for syncing music, games, and videos. Tellingly, the company has opened a research facility in Hollywood. Just as Nokia evolved from a paper mill to a rubber producer to a telecom giant, it is now preparing for its next transformation into a full-fledged multimedia entertainment company.

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