Nokia tipped to announce Microsoft partnership on 11 Feb

Analysts expect major change in direction for struggling handset firm

Nokia is expected to announce a partnership with Microsoft during a strategy and financial briefing on 11 February, which would see the Finnish manufacturer roll out Windows Phone 7 devices in an attempt to remain competitive in the smartphone market.

Analysts are expecting Nokia chief executive Stephen Elop to outline a change in strategic direction but were cautious about its chances of turning round Nokia's fortunes.

Nick Jones, a vice president at analyst firm Gartner, suggested that a partnership with Microsoft is one of the options available to Nokia.

"A vendor's goal is not just to sell handsets, but to sell devices plus services. All the big players, such as Apple, Google and Nokia, want to have cloud services and applications supporting their devices," he told V3.co.uk.

"If Nokia went with Android it would be abandoning the service opportunities, such as advertising, to Google, so I don't think an Android deal would benefit Nokia that much."

Jones acknowledged that it is desirable for manufacturers to own their own platform and ecosystem, but also noted that it is unlikely that Nokia's untried MeeGo platform will be good enough to take on Apple and Android in the high-end market.

"Windows Phone 7 is in a much weaker position than Android, and Microsoft might be willing to negotiate some concessions, such as supporting Qt and Ovi apps on the Phone 7 platform, which might be a better deal for Nokia," he said.

Nick McQuire, EMEA research director for enterprise mobility at IDC, agreed that a deal between Microsoft and Nokia makes sense, but warned that it does not guarantee success for either party.

Nokia tipped to announce Microsoft partnership on 11 Feb

Analysts expect major change in direction for struggling handset firm

"The market is bracing for something big from Nokia next week. This deal makes sense from a variety of angles, most notably that it marries Microsoft's software expertise with Nokia's expertise in phone industrial design," he said.

"However, Windows Phone 7 still has to prove itself as a consumer smartphone platform, and it has a way to go to do that. Nokia will also have to articulate a clear vision for its R&D efforts in the MeeGo and Symbian platforms."

Nokia desperately needs a change in strategy as it has been struggling in the smartphone market for some time, added Ian Fogg, a principal analyst at Forrester Research.

"Nokia has successfully spotted the trends in the mobile space over the past 10 years, but it has created comprehensive and ambitious strategies and failed to execute them," he said.

"The Symbian devices released at Nokia World 2010 have not turned the tide in Nokia's favour. Partnering with a another firm and using a different operating system will mean Nokia has less work to do to create a compelling product."

Nokia has had a year it would rather forget, and is under pressure after a 23 per cent year-on-year fall in fourth-quarter profits to €884m.

In 2009, Nokia strenuously denied claims that it had partnered with Google to create an Android-based smartphone.

However, the refusal to adopt Android could yet prove a costly mistake for Nokia, as the Google-owned platform has achieved huge success and is tipped to overtake Symbian as the most popular operating system.