UPDATED 12:45 EDT / JULY 11 2011

Microsoft and Nokia Strengthen Ties, but is it Good for Business?

Microsoft and Nokia have struck a multi-billion dollar partnership to develop a line-up of Nokia-built devices powered by Windows Phone 7.  Both of the companies have been struggling to keep up with the competition with their own individual offerings, though this is especially true for Nokia.

As a part of the deal the two companies’ engineering teams are collaborating a great deal, and All Things Digital’s Ina Fried shed some light on the whole process. Nokia’s Jo Harlow, head of the phonemaker’s smartphone business, said this:

“We’ve spent last couple months working really closely together to get first products really materializing, we all feel confident about where we are,” she said. “I’m committed to one model this year,” Harlow said. “More would be great.”

Nokia may be confident about its partnership with Microsoft, though its investors are not. The announcement of the deal has not stopped the Finnish phonemaker’s shares from declining, now that its market share dropped to 25 percent in the first fiscal quarter of 2011, down from 31 percent during the same period last year.  As of 2007, the year the iPhone was launched, Nokia’s share slid almost 90 percent in light of the intensifying competition.  Android currently holds the largest share of the smartphone market at 38 percent, though Apple is catching up with the highest growth rate in the industry these past few months, according to a new Nielsen report.

Microsoft, which will be holding its earnings call later this month, will also be under some scrutiny regarding its latest developments, partnerships and acquisitions. The company will report fourth quarter earnings on July 21 as well as year-end results for fiscal year 2011, and investors will be looking at several things. Among them is its yet to be approved acquisition of Skype for $8.5 billion.


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