Nokia Turns to Microsoft for Smartphone OS

Nokia announced on Friday that it struck a deal with Microsoft to use Windows Phone 7 as its primary smartphone operating system. The two companies are calling the deal “a broad strategic partnership” that will “create a new global mobile ecosystem.”

Along with Windows Phone 7, Nokia will use Microsoft’s Bing search engine and Microsoft adCenter for in-app advertisements, and will merge its Ovi app store into Microsoft Marketplace. Microsoft promised to start using Nokia Maps for its location services, and will take advantage of Nokia’s customer billing services in regions where credit cards aren’t widely used to make it easier for potential customers to use Windows Phone Services.

Nokia’s Stephen Elop (left) and Microsoft’s Steve Ballmer (right)

Nokia will also be directly involved with Microsoft in “a shared development roadmap to align on the future evolution of mobile products.”

The deal should help Nokia compete against Apple’s iPhone and Google’s Android OS. While Nokia is still the big name world wide in the mobile phone market, it has been losing marketshare to Apple and Google.

Working with Nokia is potentially a good move for Microsoft, too, since it can get its new mobile OS on more handsets and into more customer’s hands.

“Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale,” said Nokia CEO Stephen Elop. “It’s now a three-horse race.”