Under-pressure Nokia links with Microsoft in smart phone move

They hope the deal will revive their own fortunes in a market they have struggled to keep up with.

Nokia, the world’s largest maker of mobile phones, said yesterday it plans to use Microsoft’s Windows Phone software as the main platform for its smart phones in an effort to take market share away from Apple’s iPhone and Android, Google’s software for phones and tablets.

The move marks a major strategy shift for Nokia, which has previously equipped devices with its own software.

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

Nokia said the partnership would “deliver an ecosystem with unrivalled global reach and scale.” However, it said the new strategy would also bring “significant uncertainties,” and expected profit margins to be hit by strong competition from rivals.

Nokia’s share price plunged nine per cent to 7.43 euro in afternoon trading in Helsinki.

Mr Elop, a Canadian, joined Nokia from a senior executive position at Microsoft last year. The first non-Finn to lead Nokia, he is under intense pressure to reverse the company’s market share losses to North American and Asian competitors.

“Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward,” Mr Elop said. He added the company was aiming at “regaining our smart phone leadership, reinforcing our mobile device platform and realising our investments in the future.”

Speaking later to analysts in London, he declined to say when Nokia would introduce a new device running on Windows Phone. But he said Nokia would not bury its own Symbian operating system or the new Meego platform that it is developing.

The Symbian technology is being used in 200 million phones with 150 million more expected on the market, Mr Elop said.

Android surpassed Symbian to become the world’s No 1 smart phone software in the fourth quarter of last year.

Microsoft chief executive officer Steven Ballmer said the partnership would give the team greater global reach. “We need to, and we will, collaborate closely on development ... so we can really align and drive the future revolution of the mobile phone,” he said.