Nokia and Microsoft form partnership
Stephen Elop was at Microsoft before taking over Nokia in September 2010
Nokia has joined forces with Microsoft in an attempt to regain ground lost to the iPhone and Android-based devices.
The deal would see Nokia use the Windows phone operating system for its smartphones, the company said.
Microsoft's Bing will power Nokia's search services, while Nokia Maps would be a core part of Microsoft's mapping services.
Earlier this week Nokia chief executive Stephen Elop sent a memo to staff warning that the company was in crisis.
Speaking at a meeting to launch the new strategic partnership Mr Elop said that "the game has changed from a battle of devices to a war of ecosystems".
"An ecosystem with Microsoft and Nokia has unrivalled scale around the globe," he said.
Microsoft's chief executive Steve Ballmer was also present at the launch, underlining the importance of the deal to the computing giant.
"Nokia and Microsoft working together can drive innovation that is at the boundary of hardware, software and services," he said.
The new strategy means Nokia's existing smartphone operating systems will be gradually sidelined.
Analysis
"So Stephen Elop has pushed Nokia off that now infamous burning platform he described to staff some days ago and into the unknown.
His chosen lifebelt is Windows Phone 7, a new smartphone operating system that has won critical praise but, so far at least, only a tiny share of the market.
So Nokia is moving from an ailing system Symbian - which still has a large chunk of the market - to a fledgeling which has yet to prove itself, made by a firm with a poor track record in mobile.
Why then, did Mr Elop not opt to go with Google's Android, the operating system with momentum behind it? Perhaps he feels more comfortable with the culture of Microsoft, where he worked until joining Nokia.
The cruel verdict from some is that two turkeys don't make an eagle - but you can't fault Mr Elop for his audacity. This is a huge moment which could shape the future of an industry."
Symbian, which runs on most of the company's current devices will become a "franchise platform", although the company expects to sell approximately 150 million more Symbian devices in future.
"This is a clear admission that Nokia's own-platform strategy has faltered," said Ben Wood, an analyst with research firm CCS: Insight.
"Microsoft is the big winner in this deal, but there are no silver bullets for either company given the strength of iPhone and Google's Android," he added.
Nokia's share of the smartphone market fell from 38% to 28% in 2010, according to monitoring firm IDC.
Nokia's upcoming Meego operating system also appears to have been sidelined.
According to the company statement: "MeeGo will place increased emphasis on longer-term market exploration of next-generation devices."
The new platform was expected to form the core of Nokia's future smartphone and tablet strategy.
The company says it still plans to ship one Meego device by the end of 2011.
For Magnus Rehle, the Nordic managing director of research firm Greenwich Consulting, Nokia may have difficulty juggling its three operating systems: Windows, Symbian and MeeGo.
"Three platforms is a lot to work with. I'm not sure there is room for so many platforms," he said.
And, as with any tie-up, there could be clashes between the two firms, he said.
Earlier in the week, Mr Elop had sent a tough memo to all Nokia staff, saying that the company was on the cusp of radical change.
The memo, published first by technology website Engadget, warned that it was standing on a "burning platform".
"Elop has to convince the best people to stay and some people will inevitably be jumping off the burning platform," said Mr Rehle.
Tiny wires are big news for chips
Egypt army vow on emergency rule
Listen carefully
It's quiz time!
From bicycles to skis
Look east
Stop the presses!
Click
