"In a market where price and selection are so much more important than brand to consumers, Apple cannot count on retaining users when competing with an offering which seems free to the end user," said Strategy Analytics' David MacQueen.

"Comes with Music" and similar products from other hardware vendors could help the music industry make up for falling CD sales and cut illegal downloads.

The battle for mobile music is increasingly crowded. Sony Ericsson launched its music package this month in Sweden, and South Korea's LG Electronics plans a service similar to Nokia's.

Nokia's package will differ from others on the market since users can keep all the music they have downloaded during the subscription period of 12 or 18 months. There are no charges for tracks downloaded as the cost is bundled to the phone price.

Analysts and music industry players said Nokia's offering could bring free music to millions of consumers and change the music industry significantly.

"The introduction of mobile handsets featuring unlimited music downloads out-of-the-box will bring about a fundamental change in the way the mass-market consumes digital music," said Rob Lewis, chief executive officer of British digital music firm Omnifone.

PUSH INTO SERVICES

The music download package is Nokia's first major push into the services business. Last year the company unveiled a revamp of its whole organization, aiming to build a new business from internet services to combat slowing growth in sales of handsets.

Nokia has acknowledged the impact Apple has made on the industry with its iPhone over the past year, saying the Cupertino, California-based computer and consumer electronics company had done the mobile phone industry "a big favor."

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