Nokia unveiled a new C5 smartphone model on Tuesday, hoping to benefit from a booming demand for cheap smartphones and from rising consumer appetite for mobile social networking.

The C5 handset will be one of the cheapest smartphones from Nokia, selling for 135 euros ($183), excluding taxes and subsidies, and hitting the shelves next quarter.

“It is products like this that will grow Nokia marketshare in the smartphone segment and help them to increase their average sale prices,” said John Strand, chief of telecoms consultancy Strand Consult.

Nokia continues to lead the global smartphone market with an around 40 percent market share, but it has lost ground to Apple’s iPhone and RIM’s BlackBerry.

Models like the C5 are not comparable to the iPhone or BlackBerry, but they help operators to sell mobile data packages to consumers, while their low prices enable operators to keep in tact investments into subsidizing phone sales.

The Finnish firm is in the midst of a massive revamp of its smartphone offering and has said in 2010 almost all of its smartphones would have a touch screen, a full keyboard or both, compared with fewer than half in 2009.

Volumes on the smartphone market are seen surging in 2010, with some analysts forecasting up to 50 percent growth, as handset vendors are pushing advanced features, once exclusive to pricey top-end models, into cheaper and cheaper phones.

The boom of cheap smartphones, coupled with flat data rates from operators, are boosting the takeup of mobile Internet usage around the world.

Already some 71 million Europeans browse the mobile internet and 40 million European use mobile social networking sites — spending on average 6.4 hours a week online from their cellphones, a survey of 15,000 people by the European Interactive Advertising Association (EIAA) showed on Tuesday.

NAME CONFUSION

After introducing the C series — focused on personal social networking — Nokia has four smartphone product families. The E series phones are for business users, X series for youth and music, and N series for the most advanced models.

It plans to use the new names across its smartphone offering.

“Over time, we are moving away from the four-digit naming system. For smartphones, I expect all new devices will follow the new format,” said Nokia spokesman Doug Dawson.

Nokia has historically flooded the market with phone models little different from each other, with additional confusion arising from their four digit names, which have been hard to differentiate for consumers.

However, the new naming of X series phones may also create confusion as Sony Ericsson has used the name for few years — X1 and X2 smartphones are from Sony Ericsson, while Nokia has launched the X3 model.

Sony Ericsson’s new flagship device is the X10, while Nokia is also widely expected to launch an X10 cellphone.

Shares in Nokia were 0.9 percent higher at 9.93 euros by 1603 GMT, compared with 2.1 percent firmer European technology shares index.

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