Work begins on first Nokia smartphones under Microsoft deal

Work has begun on the first Nokia smartphones based on Microsoft software, following the partnership announced by the companies last month, said Nokia chief executive Stephen Elop.

He was recruited last year to rescue Nokia from increasing irrelevance at the high end of the market, and is under huge pressure to produce results from the partnership.

Elop, who left a Microsoft executive post to join Nokia last September, also said he could see no good reason for the speculation that Microsoft might try to buy Nokia.

"I'm not aware of a strategic interest that Microsoft would have in the rest of the business," he said.

"To the extent that a partnership has been formed around what they're really interested in, then what would an acquisition bring other than a good year of anti-trust investigation, huge turmoil, delays?"

Almost half of Nokia's handset revenues come from more basic mobile phones, which are popular in emerging markets. The company has struggled to establish its brand in the United States, especially since Apple launched its iPhone.

Nokia also considered partnering with Google, but decided it would be too difficult to differentiate its smartphones from a multitude of other Android devices made by the likes of Samsung and HTC.

Nokia's chairman has said Windows-based Nokia phones will be on sale from next year, though Elop has said he aims to produce a Windows phone by the end of this year.

"We're right now, today, having people work on the first Windows phone devices from Nokia. That work is already under way. If this was an acquisition scenario, that wouldn't be possible," Elop said.

The agreement between Nokia and Microsoft still has to be finalised, something Elop has said he expects to happen in the next couple of months.