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Nokia and Microsoft form alliance

Strategic partnership will see Nokia switch focus on Windows Phone OS, co-development

Nokia and Microsoft form alliance
Steven Elop and Steve Ballmer announcing the new strategic partnership.

Nokia and Microsoft have announced that they are to collaborate on mobile devices, through a new strategic partnership.

Under the agreement, Nokia will now put Microsoft's Windows Phone OS at the core of its smartphone strategy, and the two will work closely together to develop new mobile devices and services.

The move is seen as an effort by Nokia to make up to ground lost in the smart phone sector to Apple and Android based devices, and to create a third phone ecosystem of devices, applications and services to compete with them.

Nokia will contribute to the future development of Windows Phone, including its expertise on hardware design and language support, and on how Windows Phone can be delivered to a wider range of price points, market segments and geographies.

The companies would also seek to build a larger ecosystem around Nokia Windows Phones, by providing Microsoft development tools for developers to create apps. Nokia's Ovi content and application store will be integrated into Microsoft Marketplace.

The two companies will also collaborate on joint marketing initiatives and shared road maps, and Nokia will use Microsoft's Bing for search across its devices, while Microsoft adCenter will provide search advertising services.

Stephen Elop, Nokia President and CEO, who joined Nokia from Microsoft in September last year, said at a press conference: "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. Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It's now a three-horse race."

Steve Ballmer, Microsoft CEO added: "I am excited about this partnership with Nokia. Ecosystems thrive when fueled 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."

The agreement will spell the end of Nokia's Symbian and MeeGo phone operating systems, which will be phased out.

Nokia also announced that will be cutting costs, restructuring its executive leadership in the US and also looking to reduce headcount globally. The company will also cut R&D costs, but aims to make its R&D efforts more productive.

Analyst reaction to the announcement

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