Both Microsoft and Nokia have lost substantial ground to their mobile competitors in recent years, and their partnership is widely viewed as a way for both to reestablish momentum. Under its terms, Nokia will manufacture devices loaded with Microsofts Windows Phone 7, a mobile operating system that eschews the iPhones or Androids grid-like screens of individual apps in favor of subject-specific "Hubs."

"With the definitive agreement now signed, both companies will begin engaging with operators, developers and other partners to help the industry understand the benefits of joining the new ecosystem," read a joint statement issued April 21. "At the same time, work will continue on developing Nokia products on the Windows Phone platform, with the aim of securing volume device shipments in 2012."

Nokia released this mockup of forthcoming Windows Phone 7 devices
(Click to enlarge)

Nokia will offer Microsoft its "expertise in operator billing" and hardware development, along with advancements in mapping, navigation, imaging and some location-based services. It will also open a branded application store that "leverages the Windows Marketplace infrastructure," according to the statement, "and will allow developers to "publish and distribute applications through single developer portal to consumers that use Windows Phone, Symbian and Series 40 devices."

In exchange, Microsoft will bring Bing search services to the Nokia device portfolio, in addition to its own expertise in other areas such as gaming and advertising.

Despite throwing its weight behind Windows Phone 7, Nokia remains publicly committed to support its Symbian OS through at least 2014. The companys roadmap features new Symbian phones hitting the market in 2011 and 2012.

"Theres still a lot of ongoing development with Symbian, the two will co-exist," Nokias Australian managing director, Chris Carr, is quoted as telling Australia IT. "Weve invested a lot of money in Symbian."

Earlier this week, meanwhile, Russian journalist Eldar Murtazin claimed Nokia will initially release four Windows Phone 7 devices. His article for Mobile-Review.com said the first handset could be called the W7, adding that it will be based on Nokia's recently announced X7 but, apart from the operating system switch, will upgrade to an eight megapixel autofocus camera.

A mockup of Nokia's "W7"
(Click to enlarge)

Another forthcoming model cited by Murtazin will be "designed to make it the most powerful Windows Phone 7 smartphone," and could, it's claimed, appear during the second quarter of 2012. The device will provide a 12 megapixel camera, Murtazin writes, adding that it will also feature a dual-core Qualcomm processor and Adreno 320 graphics (this would be despite the fact that Microsoft hasn't yet added such parts to a Windows Phone 7 chassis specification).

Murtazin added claims about two additional phones. One, he said, will probably be a variant of a model initially designed for Symbian, and will be a "candy bar" phone with a metal body and a QWERTY keypad. The other will be an "affordable" variant of the W7 mentioned above, using cheaper body materials and a fixed-focus camera, he claimed.

Mobile-Review.com further suggested that Nokia will not be allowed to add its own customizations to Windows Phone 7 software, because if Microsoft permitted these for one vendor, it would have to permit them for all. But Murtazin claims Nokia will nonetheless craft a "unique selling point" for corporate users in the form of a cloud-based service whose details have yet to be revealed.

We've previously reported that Microsoft's "Mango" update to Windows Phone 7 -- Mango, first promised in February by Microsoft CEO Steve Ballmer, enables application multitasking for background processing, audio and file transfer, and fast application switching. Holding a phone's back button down will reportedly provide a card-like view (right) of all running applications.

Not without risks ...

According to recent data from analytics firm comScore, Microsofts share of the smartphone market dipped to 7.7 percent for the three months ending in Februarydown from 9 percent in November 2010, and sufficient to place the platform behind Google Android, Apples iOS and Research In Motions BlackBerry franchise. Part of that decline can also be attributed to users abandoning Microsofts antiquated Windows Mobile platform, either for Windows Phone 7 or rival smartphones.

Windows Phone carries some risks for Nokia, something the manufacturer acknowledged recently in its publicly released Form 20-F 2010 report.

"If we fail to finalize our partnership with Microsoft or the benefits of that partnership do not materialize as expected, we will have limited our options and more competitive alternatives may not be available to us in a timely manner, if at all," reads one section of that report. "Our expected transition to the Windows Phone platform may prove to be too long to compete in the smartphone market longer term."

Nicholas Kolakowski is a writer for eWEEK. Jonathan Angel added material to this story.

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