Nokia And Microsoft Finally Announce Strategic Partnership

Nokia and Microsoft today announced plans to form a broad strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem.

Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer announce partnership during press conference at Nokia Strategy and Financial Briefing on Friday Feb. 11, 2011. Photo: Nokia)

Nokia is forming a strategic partnership with Microsoft to make Windows Phone 7 its primary smartphone operating system, in an attempt to revive its fortunes in North America and compete against the threat from Google Android and Apple’s iPhone.

“Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience,” Stephen Elop, Nokia President and CEO, said at a joint news conference in London.

“Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It’s now a three-horse race,” added Nokia CEO Stephen Elop, a former Microsoft employee.

“I am excited about this partnership with Nokia,” said Steven A. Ballmer, Microsoft’s Chief Executive. “Ecosystems thrive when fuelled by speed, innovation and scale. The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.”

Confirming what many had expected, Nokia said that it will adopt Windows Phone as its “principle smartphone strategy” while contributing its expertise on hardware design and language support so that it can bring the software platform to “a larger range of price points, market segments and geographies.”

The Finnish phone maker will use Microsoft’s Bing service for search functionality across its devices, and Nokia Maps will be a core part of Microsoft’s mapping services, the company said, adding that Nokia’s content and application store, Ovi, will be integrated with Microsoft’s Marketplace.

Nokia meanwhile is moving its focus away from longstanding operating system Symbian, saying it would become a “franchise platform” that would look to previous investments to harvest value.

It spoke of retaining but also “transitioning” the installed base of 200 million Symbian owners, though it added it expected to sell approximately 150 million more Symbian devices in the years to come.

Nokia said Meego, the forthcoming platform for smartphones,  would become an open source project that focuses more on next-generation devices and that it would ship a MeeGo-related product later this year.

The company appears to be moving its focus away from Meego, evident in the announced exit of Alberto Torres, who was responsible for responsible for developing solutions and devices based on the MeeGo platform.

The announcement sets the stage for today’s long-awaited Capital Markets Day for Nokia in London, in which new Nokia CEO Elop, a former executive of Microsoft, is scheduled to lay out a new strategy for the company.

Nokia also renamed its Executive Board as its new Leadership Team, consisting of executives including Mary McDowell and Niklas Savander – previous reports had suggested that the two would be shown the exit as part of Elop’s reshuffling of management.

The company is also changing its structure: from April 1 it will divide itself into two business units: Smart Devices and Mobile Phones, with the former focusing on high-end smartphones and the latter, mass-market mobile phones.

Nokia, although still the world’s largest handset maker, was struggling in the high-end market, where its lineup of smartphones based on its Symbian software lost significant ground to rivals including Apple and vendors of smartphones based on Google’s Android platform, particularly in the profitable North American market. [Microsoft via Forbes and The Telegraph (UK)]

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