However, reaction to the news has been mixed with some analysts questioning whether the Windows 7 platform is ready for the enterprise market.
Following promises of dramatic changes to its business model, Nokia will adopt Windows Phone as its main smartphone strategy. Additionally, it will use Bing to power its search engines across Nokia devices and services. Microsoft’s adCenter will provide search advertising on Nokia devices and services.
The two companies will closely collaborate in development. Microsoft will adopt Nokia maps as a core part of its mapping services, Nokia’s content and application store will be integrated with Microsoft Marketplace, and Microsoft development tools will be used to create applications to run on Nokia Windows Phones for the benefits of developers to leverage the ecosystems’ global reach.
“Together we will bring consumers a new mobile experience with stellar hardware, innovative software and great services we will create opportunities beyond anything that currently exists,” Nokia CEO, Stephen Elop, said in a video release.
Aside from the partnership with Microsoft, Nokia has also announced it has devised a new leadership team and organisational structure with a focus on speed, results and accountability. In addition, it has highlighted a focus on investments in next generation disruptive technologies.
The Nokia Leadership Team, previously the Group Executive Board, will consist of the following members: Stephen Elop, Esko Aho, Juha Akras, Jerri DeVard, Colin Giles, Rich Green, Jo Harlow, Timo Ihamuotila, Mary McDowell, Kai Oistamo, Tero Ojanpera, Louise Pentland and Niklas Savander.
Alberto Torres has stepped down from the management team, citing a desire to pursue other interests.
The company has also restructured and will be split into two divisions - Smart Devices and Mobile Phones. Each unit will have its own profit-and-loss responsibility and accountability.
Smart Devices includes Symbian Smartphones, MeeGo Computers and Strategic Business Operations, and will be responsible for the Windows Phone portfolio.
Under the strategy, the much-maligned MeeGo because open source. Going forward, MeeGo will place emphasis on longer-term market exploration. Nokia still plans to ship a MeeGo-related product later in the year.
The Mobile Phone will drive the company's low to mid range product portfolio.
Nokia Siemens' Networks continues in the Nokia Group as a separate reporting entity.
Is it good or is bad?
Within hours every commentator in the mobility filed had his or her say and as could be expected reactions to the news were varied.
"The Nokia/Microsoft Microsoftalliance ... is far from a natural fit, and it's going to take some serious re-engineering and a lot of time to make it work," noted Carl Howe, an analyst at Yankee Group, in an email.
Windows Phone had a "very high hardware requirement", Howe said, arguing that it would only fit in expensive Nokia smartphone hardware. That meant that at least 70 per cent of Nokia buyers won't see any Microsoft software "for years to come."
"It's way too early to tell if this partnership will be successful or if anybody ... will care about Nokia smartphones or tablets running Windows Phone 7," Forrester Research analyst, Ted Schadler, wrote in his blog.
Schadler listed a number of things that need to happen for the alliance to succeed, among them creating a tablet computer on a Windows Phone OS. Nokia also has to sign up carriers willing to sell the new WP7 smartphones and tablets, he said, and the partnership must ensure porting of Microsoft Word, PowerPoint, Excel and SharePoint Workspace to those devices.
After ticking off that list of requirements, Schadler said, "If they execute brilliantly, then they could be relevant."
But at least one commentator said the Nokia-Microsoft alliance was good news ... for Apple-legally speaking. Florian Mueller, a technology patent and intellectual property expert, explains in a blog post how Nokia's decision to join forces with Microsoft could end the heated legal battle between Apple and Nokia over alleged patent infringement.
Regardless of the strategic advantages for Microsoft and Nokia resulting from this partnership--and my conspiracy theory notwithstanding--there are also legal benefits for Nokia. Had Elop chosen to jump on the Android bandwagon, he might have exposed Nokia to additional patent infringement charges and more law suits from Apple. By teaming with Microsoft, Nokia has a deep patent pool to draw from and can most likely bring its legal battles with Apple to a close.
"I can't imagine that Apple would assert any of its patents against Windows Phone 7. Nokia is now covered by Microsoft as far as Windows Phone-based devices are concerned, and it's been a long time since Apple and Microsoft had (and settled) a patent dispute. They need each other," Mueller said.
While patent litigation has developed into a standard business practice and competitive strategy for tech companies, it uses up a lot of resources unnecessarily. Mueller sums up with, "I won't venture to predict when Apple and Nokia will finally settle, but I wouldn't be surprised if it now happened within a matter of months."
Market researcher, Gartner, said technically, Nokia's E7 smartphone is a better option for enterprises than Windows Phone 7 phones. But Nokia's announcement it will adopt Microsoft's Windows Phone as its primary smartphone OS means users have to prepare to switch.
Businesses that have ordered the new Symbian 3-based Nokia E7, which started shipping in the US this week, have bought a good product, but will have to move from that environment in about two years, according to Leif-Olof Wallin, research vice president at Gartner. Windows Phone 7 is mainly a consumer-focused OS.
"I'd rather go with an E7 today than a smartphone based on Windows Phone 7," Wallin said.
Windows Phone 7 isn't ready for the enterprise market yet. It still needs the ability to load applications from sources other than Microsoft's Marketplace, and on-device encryption, according to Wallin.
However, implementing on-device encryption on Windows Phone 7 isn't necessary, thanks to the lack of a removable memory card, the remote wipe feature and a password to disable the lock screen, said Peter Wissinger, business group director at Microsoft Nordic's mobile communications business. Adding on-device encryption also slows performance, drains the battery and makes the phone more difficult to use, Wissinger said.
IT departments can prepare by implementing a management platform that can handle multiple OSes, Wissinger said. Such platforms are available from companies including MobileIron and Excitor, he said.
Gartner's Wallin agreed. In general, implementing a management platform that can handle multiple OSes is a good strategy because pressure from users to bring their own phone to work is mounting, he said.
At a briefing on the tie-up with Microsoft, Nokia CEO, Stephen Elop, fielded questions about the future of Nokia's Symbian-based Eseries smartphones by saying that Windows Phone 7, from now on, is its primary smartphone platform. He also objected to criticism that Windows Phone 7 isn't enterprise ready, and added that the productivity applications on the OS are the best there is.
Elop was president of Microsoft's business software group until Nokia tapped him to lead the company last September.
Microsoft CEO, Steve Ballmer, who was also at the announcement, hinted that Microsoft is working on adding more features to Windows Phone 7 that administrators and IT departments will appreciate, but did not go into detail.
The partnership also has a massive impact on developers who had previously built a business around coding apps for Symbian smartphones were put on notice Friday that they should pick another platform, as Nokia announced its switch to Microsoft's Windows Phone 7. Other platforms will be maneuvering to win them over while Nokia tries to encourage them to retrain and work with its new partner.
Symbian, the OS in Nokia's smartphones, was a fading star even before Friday's announcement that Nokia will drop it in favor of Windows Phone 7 as part of a broader partnership with Microsoft. Nokia's market share had been slipping ever since the launch of Apple's first iPhone, which simplified the distribution of mobile apps with its online App Store. However, things went downhill faster after the arrival of Android, sales of which overtook Symbian in the fourth quarter, according to some estimates.
There are about 200 million Symbian phones in use, 50 million of them compatible with its Qt app development framework, according to Purnima Kochikar, head of Forum Nokia at Developer Community. The company expects to sell another 150 million Symbian phones, including some yet-to-be-released models, before finally abandoning the platform altogether. At current sales rates, that would take it just over a year, although sales can be expected to slow now that the platform is on its way out. And given the rate at which consumers replace their mobile phones, it's unlikely that the number of Symbian devices actually in use will grow during this period.
"I suspect this won't affect the current crop of Symbian^3 phones ... but this does sound like the death knell for Symbian. A sad day," said Neil Briscoe, in a post on the All About Symbian forums.
App developers targeting the Symbian platform, then, are faced with a shrinking market with a limited life. Those targeting MeeGo, another Nokia-backed OS that hasn't even reached the market yet, are in an even worse situation: there is no installed base, and Nokia says that it will release just one MeeGo-based device before casting the platform adrift.
Nokia will do what it can to help developers code for Windows Phone, company executives said. However, that help won't extend to porting Qt, the development framework with which Symbian and MeeGo developers are familiar, to Windows Phone.
"It would fragment that environment, which would be repeating our mistakes of the past," Nokia spokesman, James Etheridge, said.
Additional reporting: Tony Bradley, Mikael Ricknas, Matt Hamblen and Peter Sayer