Nokia and Microsoft have confirmed that they are to form a “broad strategic partnership that will use their complementary strengths and expertise to create a new global mobile ecosystem”, during an announcement on Friday morning.

In a joint statement issued at 7:30am, ahead of a further strategic financial announcement by Nokia, the two companies are to work together to take on Google and Apple.

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

"Nokia and Microsoft intend to jointly create market-leading mobile products and services designed to offer consumers, operators and developers unrivalled choice and opportunity. As each company is to focus on its core competencies, the partnership will create the opportunity for rapid time to market execution. Additionally, Nokia and Microsoft plan to work together to integrate key assets and create completely new service offerings, while extending established products and services to new markets," the two said in the statement.

Under the agreement the handset manufacturer will use Windows Phone 7 as its core operating system, helping to drive the fairly new OS to success.

“I am excited about this partnership with Nokia,” said Steve Ballmer, Microsoft CEO. “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.”

Nokia's future

Under the proposed partnership:

- Nokia would adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.

- Nokia would help drive the future of Windows Phone. Nokia would contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.

- Nokia and Microsoft would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.

- Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services.

- Nokia Maps would be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience

- Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit card use is low.

- Microsoft development tools would be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.

- Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience.

"With Nokia's planned move to Windows Phone as its primary smartphone platform, Symbian becomes a franchise platform, leveraging previous investments to harvest additional value. This strategy recognises the opportunity to retain and transition the installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come," says Nokia in the report. 

"Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year."

Nokia's new start

Nokia has also said that it will spilt its smart devices and mobile phone divisions into two distinct business units:

“As of April 1, Nokia will have a new company structure, which features two distinct business units: Smart Devices and Mobile Phones. They will focus on Nokia's key business areas: high-end smartphones and mass-market mobile phones.  Each unit will have profit-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing.

"Smart Devices will be responsible for building Nokia's leadership in smartphones and will be led by Jo Harlow. The following sub-units now in Mobile Solutions will move under Smart Devices:
 Symbian Smartphones
- MeeGo Computers
- Strategic Business Operations.

"To support the planned new partnership with Microsoft, Smart Devices will be responsible for creating a winning Windows Phone portfolio.

"Mobile Phones will drive Nokia's "web for the next billion" strategy. Mobile Phones will leverage its innovation and strength in growth markets to connect the next billion people and bring them affordable access to the Internet and applications. The Mobile Phones unit will be led by Mary McDowell."

Interesting times ahead.

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