Even though Nokia’s Symbian mobile operating system commands the lion’s share of the worldwide smartphone market, the world’s largest handset maker is looking to Linux to take on the iPhone.

Sources have told Reuters that Nokia is positioned to announce its first Maemo-based phone next week at an event in Stuttgart, Germany. Originally designed for Nokia’s Internet Tablets line, the Linux-based operating system will now reportedly transition over to at least some of the handset maker’s cell phones.

Now, a Linux derivative is primed to play a “key role” in Nokia’s top-tier lineup, reportedly offering more flexibility for the company than its Symbian operating system. Tero Kuittinen of MKM Partners said that Maemo is a better option for a line of complex devices that would benefit from

“rapidly evolving user-interface software.”

The report seems to confirm weeks of rumors that Maemo would make an appearance on Nokia phones after various screenshots surfaced online. However, Nokia has insisted that it is not abandoning Symbian.

Last month, Nokia told investors that its global market share would likely recede over the next year, as it loses ground to competitors Apple and Research in Motion.

Recent numbers showed that Symbian still has a 50.3 percent total market share, but that number is well down from the 72 percent the platform had in 2006. This as Apple’s iPhone has continued to gain on the market leader since the debut of the iPhone in 2007. In the second quarter of 2009, the iPhone represented 14 percent of global smartphone sales.

Nokia has lost its overall market share leadership in the worldwide smartphone segment to Apple in mobile ads share, BNET Technology reports. According to statistics from AdMob, Apple’s iPhone received 49 percent of ad traffic in May, compared with 32 percent for Nokia.

Why is mobile ad share important? Because in the smartphone segment, the tail wags the dog — apps drive customer loyalty more than hardware features… Yes, Apple offers many more apps, and yes, it’s more geared to consumers than Nokia.
Nokia already realized about the power of mobile applications and contents. As we know, Ovi Store is Nokia’s answer to the iPhone’s App Store.