Microsoft, Nokia Strike Broad Alliance Centered On Windows Phone 7

Nokia and Microsoft unveiled a broad strategic alliance Friday under which the two companies will develop a new mobile device ecosystem based on Microsoft's Windows Phone software to compete against rivals Apple and Google.

For Microsoft the deal could provide a boost for the Windows Phone 7 mobile operating system the company launched last year to compete against the Apple iPhone and Google Android devices. Since smartphones based on Windows Phone 7 began selling in October Microsoft has shipped about 2 million copies of the mobile OS.

For Nokia, the Microsoft relationship is part of a broader effort to turn around its struggling position in the mobile phone arena. Friday Nokia also disclosed changes in its management ranks and operational structure.

The two companies announced the relationship during a press conference in London with Microsoft CEO Steve Ballmer and Nokia President and CEO Stephen Elop, who was president of Microsoft's Business Division before leaving to take the Nokia post in September.

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"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward," Elop said in the press conference. "Today we are accelerating that change through a new path, aimed at regaining our smartphone leadership, reinforcing our mobile device platform and realizing our investments in the future."

While Nokia is the world's largest manufacturer of mobile phones, phones based on its Symbian operating system have been losing market share to iPhones and Android-based devices.

Next: The Future Of Nokia's Symbian OS

Under the strategic alliance Nokia will adopt Windows Phone as its principal smartphone platform. Nokia also will assist with the future development of Windows Phone, contributing expertise on hardware design and language support. And Nokia and Microsoft will engage in a number of joint marketing initiatives.

Nokia also will use Microsoft's Bing search technology across its devices and services, while Nokia Maps will become part of Microsoft's mapping services. And Nokia's content and application store will be integrated with the online Microsoft Marketplace.

"Ecosystems thrive when fueled by speed, innovation and scale," Ballmer said at the press conference. "The partnership announced today provides incredible scale, vast expertise in hardware and software innovation, and a proven ability to execute."

With Windows Phone becoming Nokia's primary mobile phone operating system, Symbian will become "a franchise platform, leveraging previous investments to harvest additional value," the company said in a statement. There are an estimated 200 million Symbian devices in use and Nokia said it expects to sell another 150 million over time.

Nokia also said that MeeGo, the Linux-based mobile operating system the company has been developing with Intel, would become "an open-source, mobile operating system project" with potential for "longer-term market exploration of next-generation devices, platforms and user experiences." Nokia said it still plans to ship a MeeGo-related product later this year.