Carphone Warehouse has cut the price of Nokia’s first mobile phone to offer unlimited music downloads by more than a third due to poor sales, analysts claim.

The cost of the Nokia 5310 Comes With Music device has been slashed from £127.10 to £82.18, despite only being on sale for less than three months.

Carphone said the sharp price cut is part of routine reductions across its mobile portfolio for its January sale.

However, analysts say sales of the device have been poor and that Nokia is struggling to convey to consumers exactly how its all-you-can-eat music proposition works.

Paolo Pescatore, analyst at CCS Insight, said sales of Comes With Music have been “lacklustre” so far.

“They are struggling with sales,” he said. “Nokia is keeping shtum about figures but we’ve heard from sources they had hoped to do better in the run up to Christmas.”

The launch of Comes With Music is a big test for Nokia, as it is the Finnish giant’s first big push into the mobile services market.

The service allows consumers to download an unlimited amount of music from the four major music labels and many independents to their computer or mobile without any digital music rights. This means the songs can be kept even after the yearly contract has expired.

The music industry, which has seen CD sales fall as a result of illegal downloading, had hoped Comes With Music and similar deals, could provide a new revenue stream and encourage consumers to consume music legally.

Nokia is also hoping Comes With Music and similar concepts could signal new revenue just as sales of mobile phones are forecast to fall this year.

The company launched Ovi, its mobile services platform, in late 2007, in the hope that consumers will pay out for its music, email, games and mapping services.

Whether its first unlimited music package succeeds will be a litmus test for consumers’ appetites for future mobile services.

“It’s a big test,” Mr Pescatore said. “Comes With Music is Nokia’s first big stepping stone for Nokia’s first big leap into the market with a service-led proposition.

“It’s a sentiment to the challenges companies like Nokia face in this market when they are seen to be just mobile makers.”

He added price cut reflected Nokia’s determination to make CWM a success in the UK.

He believes the company needs to market the device better as he feels many people do not understand the proposition.

“Comes With Music is almost too good to be true,” he said. “The average punter on the high street still doesn’t understand how it works. Nokia needs to improve its marketing.”

So far Nokia has only launched Comes With Music in the UK. It plans to roll it out in many key markets, including the United States this year and on more handset models.

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