Welcome to the kangaroo court, Silicon Valley style. Nokia may sell a phone somewhere on this planet every 18 seconds, but among the digerati in the Valley, that doesn't get the Finnish handset giant much respect. Here, the natives are all toting iPhones and BlackBerrys and raving about new horizons on the mobile Web.

Eventually the iPhone bigots will get to you, as they did to David Rivas, a Nokia vice president in charge of its smart phone software efforts. "You're ignoring Japan, you're ignoring Korea. The statement that somehow the Web has not been mobile until the iPhone is absurd and back to the point about parochialism," he told a room full of venture capitalists and software developers at a conference in July organized by tech blog impresario Michael Arrington.

"Wake up!" someone heckled from the back of the room as Rivas spoke. Arrington, the Valley's answer to Judge Judy, wasn't buying it either. "I believe that Nokia and Symbian [the software that powers its smart phones] are irrelevant companies at this point," he pronounced from the stage.

Quite a verdict, considering that Nokia sells close to half of all smart phones worldwide (and 40% of all phones) and has 9,200 applications written for its phones. In early July it plunked down $410 million to buy the portion of Symbian it didn't already own.

Nokia intends to give away Symbian's code to any handset company that cares to use it. It has already signed on Motorola, Sony Ericsson, NTT DoCoMo, Texas Instruments, Vodafone, Samsung, LG Electronics and AT&T. An estimated 18.5 million phones running Symbian shipped during the first quarter of 2008.

But will that be enough?

Nokia is a phenomenal manufacturer, distributor and marketer of hardware, but it has some serious software problems. It can give away all the Symbian code it wants, but that may not sway mobile carriers and the application developers in Silicon Valley (a loud and influential bunch) that Nokia phones are a better home than the iPhone or Research in Motion's BlackBerry.

The success of the iPhone and Apple's online mobile-software store has underscored this. Apple has sold more than 7 million iPhones in just over a year, and $30 million in programs from its App store in the first month it was open. Later this year, iPhone will start showing up in every Best Buy Mobile store, the kind of mass distribution Nokia lacks in the U.S.

"Everyone is looking for a more of an iPhone/BlackBerry-like solution," says Thomas Conrad, chief technology officer for online music service Pandora.

Nokia sells hundreds of phone models and supports three different operating systems. No two phones work exactly the same way. Simple models like Nokia's 2610 aren't compatible with the Symbian software used on Nokia's best handsets, such as the N95. Applications written for the iPhone, by contrast, will run on every iPhone.

The user interface known as S60 that Nokia built atop Symbian for its best phones lacks Apple's ease of use. Research firm Perceptive Sciences asked 10 people to send e-mails from an iPhone and an N95. On average, the task took individuals two and a half minutes with the iPhone and twice as long on the N95. Only half of the people could even manage to send an e-mail on the N95.

More than 80% of iPhone owners use its Web browser, compared with 60% for Nokia's N95, according to market tracker M:Metrics. The iPhone is used more often for social networking, maps, applications and listening to music. The N95's only edge was in watching video.

"You can trick yourself into believing the iPhone is not such a big deal if you say there are only 7 million in the world," says Samuel Altman, chief executive of Loopt, a maker of a popular mobile social-networking program. "But you would be completely wrong, because you've got to take into account the engagement levels."

Nokia's share of the mobile phone business is close to an all-time high, but its share of the smart phone market got clipped in the first quarter of this year, dropping from 46.7% to 45.2%. The big gainers were, of course, Research in Motion and Apple. That's a problem for Nokia, since analysts say 40% of the giant's profit comes from high-priced smart phones.

"Symbian is not dead, but it has a limited amount of time to act to capture developer mind share before it is too late," says Altman.

Add to that problem Google's entry into the market later this year with free smart phone software of its own, dubbed Android, which companies such as Taiwan's HTC promise to put on handsets. Microsoft, meanwhile, continues pushing its software to handset manufacturers, with some success. During its last fiscal year (which ended in June), Microsoft shipped 18 million licenses for Windows Mobile--a number that some executives have grumbled was below Microsoft's 20 million goal.

Nokia's next move is under wraps, but it confirms that it will start selling a touch-sensitive handset that will run a new flavor of its smart phone software by year's end. The device, reportedly code-named Tube, promises to pair Nokia's manufacturing smarts with its Web-friendly operating system that, unlike the iPhone, already runs Flash and Java. Useful applications, such as the Reader from Kurzweil Technologies, already allow a blind person with a N82 Nokia phone to snap a picture of a bit of text and have it read aloud.

But Nokia will find it hard to impress the snobs in Silicon Valley if they can't find its best goods. Nokia sold a mere 184,000 smart phones in the U.S. in the first half of 2008, or 1% of the market, according to market analysis firm Canalysis.

Carriers here have been loath to give Nokia much love over the years, as the Finnish behemoth has often thumbed its nose at requests for cheap phones customized for the U.S. Nokia has also rapidly moved into selling the kinds of music, game and navigation services that carriers depend on for extra revenue.

"There are a lot of angry people at Nokia," says Gregory Gorman, a veteran wireless-industry consultant who hotly disputes any assessment of Nokia as irrelevant. If Nokia manages to claw its way back into fashion, the bloggers in the Valley will have to find someone else to declare irrelevant next year.

Source:forbes.com