Navigation by phone

Nokia's Maps 2.0, for its Series 60 and 40 phones, is part of the firm's push into location and context-aware technologies.

Mr Kallasvuo said: "Navigation is one of the foundations of the context-aware mobile phone. We believe it will be as important as voice capability was 20 years ago.

He added: "Your mobile device will soon be in tune with your surroundings and adjust accordingly."

Nokia expects to sell 35 million mobile phones equipped with GPS (Global Positioning System) in 2008.

Nokia said it was the world's first pedestrian navigation on a mobile phone.

Niklas Savander, executive vice president of services and software, said: "The future is about bringing context - time, place and people - to the web; that is the foundation of the next generation of the worldwide web."

Nokia made its announcement as the Mobile World Congress opened in Barcelona, with methods of driving mobile uptake worldwide firmly on the agenda.

A raft of new handsets and services are expected to be unveiled.

"We have 2.5 billion connected but how do we connect the next three or four billion and deliver services to the lowest income groups," said a spokesman for the GSM Association.

Analysts predict more tie-ups between mobile firms and companies like YouTube and MySpace.

Mobile entertainment - the combination of mobile phone, social networking and location-based services - is being touted as the killer application for the future.

Nokia's announcement underlines its belief that GPS chips will become as ubiquitous in mobile phones as cameras. It has already made a $6bn (£3bn) investment in mapping company NavTeq to show that it is putting its money where its mouth is.

The company also announced a successor to its flagship N95 phone.

The N96 comes with 16 Gigabytes of onboard flash memory, and the ability to access live mobile TV through DVB-H.

The phone is also able to play flash videos online, such as clips on YouTube, through its web browser.

The company sold six million N95s last year.

Location, location

The move to web applications is likely to continue although the tricky part will be finding a way of translating the economics of the mobile world - where data comes with a charge - to the free net-based applications it wants to mimic, thinks analyst Margaret Rice-Jones, chief executive of mobile consultancy AIRCOM,

Location-based social networking, allowing you to find out the exact location of your buddies, could be one way that mobile can offers something over and above web-based applications.

"I don't think the average Facebook user will pay to spend two hours looking at the site on their phone or uploading the photos of their mate drunk in the bar at 2am but they might be interested in knowing that one of their friends is in the bar that they are walking past," she said.

At the start of the conference LG announced a new smartphone with built-in GPS, the LG-KT610, to take advantage of location-based services.

Sony Ericsson has unveiled its first handset powered by Windows Mobile, the Xperia, and it too comes with GPS.

Gypsii, a social networking service offering location-based search for people, places, content and events will be launched on the first day of the conference.

"The real time location-based element of GyPSii adds a new dimension to the social networking phenomenon," said Dan Harple, founder and CEO.

"Rather than sitting indoors chatting to friends on an pc-based service - you can be out and about seeing who is nearby, what they are doing and where you could go - all in real time," he added.

Mobile payments

For years the mobile world has talked about the possibility of the phone as a replacement for all the plastic we carry around in our purses and wallets.

The tail-end of last year saw a tie-up between Transport for London's Oyster card, O2, Nokia and Visa in a trial allowing commuters to pay for their tube tickets via mobile and make small purchases in a range of shops.

But increasingly eyes are turning to the developing world where the mobile wallet is not just a convenience but a necessity.

According to Norman Frankel, managing director of Mi-Pay, a mobile banking firm which has systems up and running in the developing world, payment via mobile is helping to "bank the unbanked".

"In some rural parts of Pakistan, people have to spend half a day walking to a village where they can top up the credit on their mobile phone," he said.

With the Mi-Pay system the mobile acts as a kind of debit card, allowing users to top up without having to leave their homes.

Another system SafariCom, in Kenya is up for the Digital Divide Award, a the Global Mobile Awards, organised by the GSM Association.

Its M-Pesa accounts are proving popular with Kenyan and allows tapping into the $93bn African remittance market - where migrant workers send cash home to their families.

Cheaper than traditional money transfer services, the idea is simple - users deposit cash in affiliated shops and get an e-voucher on their phones.

Leading-edge phone technology on show in Barcelona