Nokia ties up with Microsoft for Windows Phone software

08:54, February 12, 2011      

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Technology titans Nokia and Microsoft are combining forces to create smartphones that might challenge rivals like Apple and Google and revive their own fortunes in a market they have struggled to keep up with.

Nokia Corp, the world's largest cell phone maker, yesterday said it plans to use Microsoft Corp's Windows Phone software as the main platform for its smartphones in a bid to pull market share away from Apple's iPhone and Android, Google's software for phones and tablets.

Analysts said the deal was a bigger win for Microsoft than Nokia, whose CEO Stephen Elop in a leaked memo this week compared his company to a burning oil platform with "more than one explosion ... fueling a blazing fire around us."

Moving increasingly to providing services for phone users, Nokia and Microsoft "will combine our strengths to deliver an ecosystem with unrivaled global reach and scale," Elop said in a statement on the deal yesterday.

Nokia said it will drive the future of Windows Phone, "innovating on top of the platform in areas such as imaging, where Nokia is a market leader."

But Nokia warned that the new strategy would bring "significant uncertainties" and said it expects margins to be hit by strong competition from rivals.

Neil Mawston of London-based Strategy Analytics said Microsoft was the big winner in the partnership, by teaming up with the biggest mobile phone vendor in the world.

"In terms of expanding their distribution reach, this is a huge win for Microsoft," he said.

For Nokia the deal leaves uncertainty about what will happen to its current Symbian operating platform. Mawston said he expects it to be phased out within two years and "completely, or at least mostly, replaced by Windows Phone."

Although Nokia still is the mobile industry's No. 1, it has suffered from plummeting market share, dropping from a high of 41 percent in 2008 to 31 percent in the last quarter of 2010.

It has also lost its innovative edge in the fiercely competitive top-end sector and is virtually invisible in the world's largest smartphone market, North America.

Apples' iPhone has set the standard for today's smartphones. Google's Android has emerged as the choice for phone makers that want to challenge the iPhone.

Source: Shanghai Daily
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