Nokia launched its much anticipated digital music service today, a move designed to both expand the company's mobile entertainment footprint and turn up the heat on Apple's iTunes and iPhone.

The service works on both music-specialized mobile phones and PCs. Users can browse and buy tracks over the air, receive music recommendations, and transfer songs from their PC to the phone. Music purchased from the service will be protected in the Windows Media Audio format

The Nokia Music Store is limited to the European market for now, and will expand to Asia in later this year. No plans were disclosed for a U.S. rollout.

A number of existing music-based Nokia phones already in the market will work with the service, including the XpressMusic line. The company also introduced four new phones in it's N-series line, including the N81-a music and gaming device position as its flagship entertainment phone positioned as its answer to the iPhone, which is not yet available in Europe. Nokia also announced plans for a touch-screen phone series next year.

Whether the service proves successful depends very much on the support of the wireless operators who rely on the company for both network infrastructure and mobile devices. Many -- such as UK's Vodafone, Orange and 3 -- either have their own digital music and entertainment services or plan to launch them soon, placing Nokia in direct competition with their clients. A leaked memo from Orange executives to Nokia hinted the operator may ban the N81 from its network if the manufacturer refuses to participate in a trial evaluating the Nokia music service against its own.

"We would expect a significant level of customer confusion and increased calls to (customer service) as a result of housing both players on a device," the memo reads, "and our data tariffs would be negatively impacted as they were not designed to deal with such large individual music files."

UK operator 3 says it has no plans to support the N81.

Additional area of concern is the response by customers. According mobile research firm M:Metrics, less than 14% of those with music capable phones downloaded music over the air in the US and Europe.

Analysts also question its impact.

"This service isn't sufficiently differentiated to make a major impact in terms of convincing consumers to either start using legal download services, or wean them off of Apple's service and dedicated music devices," wrote Forrester Research analyst Charles Golvin in a research note shortly after the announcement. "We further don't believe that the phone will be the interface that consumers will opt for to purchase music (or as Nokia suggests, entirely replace dedicated music players). The PC is the best experience and mobile will be for isolated impulse buys -- and even then this use model requires operators to offer flat rate data access services on high speed networks, and requires consumers to be willing to pay for them."

Nokia's music service is based on the Loudeye platform, which the company acquired for $60 million last year. It is the flagship of several digital entertainment initiatives Nokia has underway. The company is trying to extend its N-Gage mobile gaming platform to PC-based casual games as well, and in November will roll out a dedicated mobile gaming distribution service. It's also dabbling in the mobile social networking space through an acquisition of Twango earlier this year.