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Nokia unveiled its latest challenge to the iPhone today, the N97, as the Finnish mobile giant vowed it would transform the internet.

The touchscreen smartphone, which has a 3.5 inch screen and both a touchscreen and a glide-out Qwerty keyboard, is the latest handset in Nokia's N series. It follows the blockbuster N95, the handset which has so far sold 15 million, and the N96, which was released earlier this year.

The N97 is the latest handset to join an increasingly crowded smartphone market that includes the G1, which runs Google's Android software, the BlackBerry Storm, which went on sale last month, and Sony Ericsson's X1.

Nokia claims the N97, which is due to be released by the middle of next year, is "the world's most advanced mobile computer" and will boast new services that will transform the way people connect to the internet.

The phone comes with 32 GB of memory - more than twice the capacity of the most powerful iPhone on the market - with the option to expand this to 48 GB with a 16 GB memory card. This means it can store thousands more songs, or hours more video, than its rivals (up to 37 hours of music and 4.5 hours of video playback to be precise).

In a gentle dig at Apple, Anssi Vanjoki, Nokia's executive vice president of markets, who unveiled the phone, made the point that the N97 can access "the entire internet, not just piece of it" as, unlike the iPhone, it will be able to play the Flash videos used on many websites.

In another move that makes the N97 more like a mini-computer than a phone, the screen tilts to a 35 degree angle when the keyboard glides out, making it easier to see the screen while typing. It is a nice touch. I tried it out: your forefingers fit snuggly behind the screen making it more stable to hold and therefore easier to type. Unlike other slide-out Qwerty keyboards, as seen on handsets such as the G1 or the HTC Touch Pro, which feel quite clunky as they move into place, the N97 really does glide, or almost pivot, out. It is a very satisfying movement.

Like most of its rivals the N97 will run over HSDPA, the fastest type of mobile broadband, with speeds of up to 7.2 Mbps, and, although this is a feature surprisingly absent in the Storm, the N97 is wifi enabled.

While the hardware is impressive, it is the software that Nokia executives are most excited about and which they say will let users personalise the internet.

The N97 will sport internet widgets that can be moved around with your finger to personalise your home screen and a Nokia Messaging button - a single application that will enable you to access any webmail, e-mail and Instant Messanger accounts you might have.

The N97 also introduces so-called "SoLo", or social location, making it easier to update social networks automatically with real-time information. The phone's integrated A-GPS sensors and an electronic compass means it knows exactly where it is, and, if your friends allow it to, will know where they are too, opening up new possibilities for gaming and applications.

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