MOBILE PHONE giant Nokia is preparing to go head-to-head with Nintendo for control of the lucrative hand-held gaming market.

The Nokia N-Gage had a low key launch, nestled discreetly among the company's range of mobile phones for 2003, but the stakes couldn't be higher.

No one - not even Sega or cult games company SNK - has ever managed to seriously challenge the dominance of the Nintendo Game Boy series.

Nintendo took handhelds to the next level when it launched the Game Boy Advance - a pocket rocket with the computing power of the PlayStation - a couple of years back. In 2003 the company plans to launch an even flashier GBA with a backlit screen and a rechargable lithium ion battery.

The N-Gage certainly looks the part. It's about the same size as a GBA with a thumb pad and backlit keypad flanking a dinky screen. The brushed silver case makes for a wonderful tactile experience.

Nokia refuses to be drawn on pricing but early indications are that it could be significantly more expensive than the £59.99 that buys entry to the GBA catalogue.

Early rumours are that the mobile manufacturer is planning to abandon the "loss leader" approach to hardware where a console is sold for a relatively low price and the profits are made from games sales. That could make the hand-held more expensive than an Xbox - something that could cripple the N-Gage before it even goes on sale. No one has ever managed to launch a console using such a controversial business model.

Undeterred, Nokia confidently expects to ship thousands of units to UK shops in time for next Christmas and, if it comes up with a killer software package, an N-Gage could still be the "must have" gadget for 2004.

And to counter accusations that it is charging too much for a gadget too close to the GBA, Nokia has thrown in plenty of other desirable features including the ability to decode MP3 files, an FM radio and, of course, a mobile phone which extends to basic web browsing and e-mail.

The fascia does have a plethora of buttons for all these functions. The lean 'n'clean look of the GBA is probably better for long term games play.

Games will be stored on MMC (multi-media card) media similar to the small storage cards already used for MP3 players and some digital cameras. Utilising MMC cards gives the N-Gage a useful memory capacity but the media will be much flimsier than the near indestructible cartridges used by Nintendo.

Nor will the N-Gage accept game cards as easily as the GBA. Switching software means switching off, dismantling the unit by removing the battery and slotting the MMC into a tiny slot.

Nokia's knowledge of mobile data networks will make the N-Gage the world's first hand held console capable of wireless multi-player fun and games.

The company has also signed up some seriously impressive publishers. Sega, Activision, THQ and Eidos have all pledged allegiance to the sexy mobile. One of the killer titles is likely to be a 3-D Tomb Raider adventure.

Surprisingly Nokia is also planning to give away a software developer's kit to anyone who asks. This unexpected move is likely to make the N-Gage a popular platform among home-brew programmers. It should ensure a steady flow of new software but, with little quality control, Nokia must beware a slew of dross games.

The N-Gage certainly has the potential to give Nintendo a real run for its money but much is still to be decided.

At the moment it seems the N-Gage is at a crossroads. If it is to be a games console the price of the hardware will have to be subsidised - exposing Nokia to massive losses if the gadget doesn't find favour.

Alternatively it could be marketed as a novelty mobile phone at a higher price. This is unlikely to be as risky for Nokia but the potential for a real mass market breakthrough is much lower.

The decisions being taken now will probably seal the N-Gage's fate - for better or worse.