Microsoft and Nokia Swear Mobile Blood Oath

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bloodoathADOTAS – I’m kinda surprised RIM didn’t jump in and make it a triumvirate of mobile sufferers: struggling mobile players Microsoft and Nokia have formed a “broad strategic partnership” that includes Nokia adopting Windows Phone 7 as its principal smartphone operating system.

Investors were so excited that Nokia shares on the NYSE continued tumbling — NOK is down about $1.50 on Friday (13.88%) and $2.30 during the last two days, meaning its value has decreased by $8.5 billion.

Both companies have been foundering on the mobile front — Microsoft won’t even drop a hint about Wp7 sales numbers while Nokia recently killed its latest MeeGo handset before it launched. In an internal email leaked earlier this week, recently installed Nokia CEO Stephen Elop (a former Microsoft man) compared the company to oil rig on fire.

Google Vice President of Engineering Vic Gundotra may have encapsulated industry sentiment when he tweeted, “Two turkeys do not make an eagle.”

Investors also know that Microsoft’s mobile partnership record is pretty shaky. Asymco curates a depressing lists of strategic partnerships that Microsoft has entered with various mobile and telecom firms, including Motorola, LG, Nortel (remember them?) and, yes, Nokia.

When you Google search “Microsoft Nokia,” a Microsoft press release from 2009 appears, featuring then-Microsoft Business Division President Elop and then-Nokia Executive Vice President for Devices Kai Öistämö. The release says the two companies will work collaboratively on “design, development and marketing of productivity solutions for the mobile professional, bringing Microsoft Office Mobile and Microsoft business communications, collaboration and device management software to Nokia’s Symbian devices.”

Less than two years later, Symbian is getting shelved in favor of WP7. You could see this as a coup for Microsoft — Nokia is considered a great handset maker, but the Symbian OS is divisive and taking the heat for Nokia’s declining market share.

There’s a lot of Internet chatter that Windows Phone 7 is this amazing mobile operating system that, like, nobody gets because they’re so blinded by their iPhones and Android devices. Oh, and because there’s been no handset yet made that is worthy of WP7’s greatness.

Elop commented that the company plans to sell 150 million more Symbian devices before shutting off development; there are an estimated 200 million Symbian smartphones operating at the moment. According to Canalys, there were more global Android device shipments than Symbian in fourth quarter 2010, but Symbian is still the most used operating system in world. While Android has caught on in Southeast Asia, Symbian dominates Europe, the Mideast, Africa and the rest of Asia.

Also the partnership offers countless outlets for Microsoft’s various initiatives. Hopefully hacking into Google’s domination of the mobile search market, Bing will power search services across Nokia devices. In addition, local advertisers will be intrigued to hear that “Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience.”

Of course, such advantages would seem to come at a price for Microsoft. The New York Times reports that both Google and Microsoft were laying out hundreds of millions of dollars in “development assistance” to get their operating systems on Nokia devices. Hmm… Gundotra’s words suddenly seem to have an aftertaste of sour grapes, but Google should have figured Elop was going to side with his old company.

You can’t say Microsoft/Nokia an inappropriate partnership as the two companies are quite complementary, filling in each other’s weaknesses in the mobile game. But Is Microsoft/Nokia really a contender in the Android/iOS horse race or just the last sad burst of energy from two older thoroughbreds? Investors seem to be placing their bets on the latter.

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