Though services hasn’t yielded financial benefits yet, Nokia says it’s committed for the long term

Nokia’s new services strategy has yet to bear fruit financially, but on the company’s earnings call Thursday, Nokia CEO Olli-Pekka Kallasvuo said Nokia is not only committed to services and applications as the future of the company, but it also plans to build more devices surrounding its growing services portfolio.

Kallasvuo hinted at two new projects, mysteriously called “Leevi” and “Gadget,” which will be embedded with new products in the Nokia software portfolio. But otherwise, Kallasvuo offered no details on the projects, and Nokia spokespeople queried after the call said the company was revealing no information about the projects until their launch.

“The portfolio will go through a significant renewal starting at the end of this quarter and into the third quarter,” Kallasvuo said. “You’ve seen some of these products already, but we plan for a lot more to come in the second half that you have not seen but we’re really excited about. Products like the ones we call Leevi and Gadget, which will bring a new degree of desirability to our portfolio, especially when combined with some of the consumer-focused services we plan to have late this year.”

Nokia has already made some significant splashes with its growing platform of Web services, applications and software. The launch of its Ovi portal brought together much of the separate work it had done with content portals and its Nokia Maps apps, and it followed up that release with the launch of its Nokia music portal and its N-Gage gaming platform, effectively separating the gaming software from the N-Gage device. Nokia has shown signs of growing even greater ambitions.

At its partner and analyst conference in Amsterdam last year, Nokia unveiled an initiative called “Comes with Music,” which would effectively be the first bundling of a content service into the price of a device. A customer would receive unlimited track downloads for an entire year from the Nokia music store with the purchase of a Nokia music phone. Once the year runs out, the free downloads stop, but the customer retains the licenses for all of the music already downloaded. Nokia said it would launch the service in 2008, which means either Leevi or Gadget could be the platform for the service. But they could just as easily be targeted at Nokia’s other services, such as gaming or navigation.

Despite the constant stream of new applications coming out of Finland, Kallasvuo stressed that Nokia’s services strategy was a long-term strategy. The services group has already consumed millions of euros, but profits from the division won’t be reflected in its earnings for some time, he said.

“We don’t have a great deal to show financially for this investment today, but we believe there is a huge opportunity here,” Kallasvuo said. “Services are expected to give us incremental growth, incremental margins and other significant benefits in the future. Currently none of our competitors are making these kinds of investments.”

Whether any of these new services reach the US remains to be seen. Though Ovi launched globally many of its features still aren’t available in the US, where Nokia vies for fourth place in market share behind Samsung, LG Electronics and Motorola. While Kallasvuo said the Nokia music portal will launch in 11 new markets in 2008, no North American market was listed. Meanwhile, Ericsson’s music service continues to gain traction in North America and the rest of the world. Ericsson and partner Napster sell a music distribution platform to carriers and have operators with 140 million total subscribers, including AT&T.

Nokia’s launch of N-Gage also had little impact in the US. Not only are the high-end Nseries devices that support the app in short supply in the US—not sold by any operator—Nokia hasn’t optimized N-Gage for the North American versions of many of the devices that are available in the US through direct retail outlets.