Apple’s iPhone has another potential rival - the N97 handset from Nokia, the world’s largest mobile handset manufacturer.

Nokia joined the rush to touch-screen phones by unveiling the N97 on Tuesday, showcasing updates to its navigation and messaging services. The handset, Nokia’s second touch-screen device in a matter of months, will begin shipping in the first half of 2009.

Nokia’s new N97 model looks chunky, with the company choosing to keep a full-size keyboard that slides out from behind the 3.5-inch, 16:9 touch-screen screen. In a hands-on review, TimesOnline reported that the keyboard slides out smoothly and not ‘clunkily’ as with T-Mobile’s G1. Moreover, the phone also comes with a Qwerty keyboard, an impressive 5-megapixel camera with a dual LED flash, 48 GB of storage and Wi-Fi.

The handset, which is being seen as an attempt by the Finnish company to regain lost ground in the touch-screen market, cannot win back market share for Nokia with its hardware alone, especially at the expected price of about $700. However, its cool new software can – no wonder Nokia is trying with what it says is a Web browser better than the iPhone’s, as well as widgets that make it easy to customize functions and location-aware applications!

In fact, the handset boasts of special software in particular - the ‘Point and Find’ – that works with the camera to help users get information on landmarks they could be looking at.

According to the company’s president and CEO, Olli-Pekka Kallasvuo, the N97 can be described as the most powerful mobile computer the world has ever seen.