Nokia and Microsoft versus Apple

THEIR names have dominated the worlds of mobile phones and computing for 20 years.

But after being bruised and battered by their common enemy Apple, Nokia and Microsoft have decided to join forces.

The two technology titans announced yesterday that they are to pool their resources to try to take a bite out of Apple in the race to conquer to the lucrative smartphone market.

By combining their technology and software, the companies are hoping to outdo the California-based firm which is behind the hugely successful iPhone.

Although it is still the world's largest mobile manufacturer, the decision by Nokia to go into partnership with the computing giant is indicative of the problems which are facing the Finnish company.

Earlier this week, a leaked memo revealed the frustrations of its new chief executive, Stephen Elop, who bemoaned that Nokia was "years behind" its rivals.

While it is still the biggest handset maker, its market share has tumbled from 41 per cent in 2008 to 31 per cent at the end of last year.

It is also widely seen to have lost its innovative edge, with just a 3 per cent share in the world's largest smartphone market, North America.

In his memo, Mr Elop warned that the firm, which makes most of its profits by selling low-budget mobiles to developing countries, was getting "further and further behind" when it came to developing smartphones such as the iPhone and Android, Google's software for mobiles and tablet computers.

Comparing his company to a burning oil platform, he said there was "more than one explosion… fuelling a blazing fire around us."

With Microsoft trying to gain market share for its Windows Phone operating system and its Bing search engine, both companies hope yesterday's announcement will offer hope of a brighter future.

Nokia said the partnership would "deliver an ecosystem with unrivalled global reach and scale". However, it warned that the new strategy would also bring "significant uncertainties", and said it expects profit margins to be hit by strong competition from rivals.

Analysts have warned that even with two such major firms pooling their resources there are no guarantees the alliance will succeed, given the strength of Apple.

Ben Wood, an analyst with research firm CCS:Insight, said: "This is a clear admission that Nokia's own-platform strategy has faltered. Microsoft is the big winner in this deal, but there are no silver bullets for either company, given the strength of iPhone and Google's Android."

Nokia's share price plunged by more than 14 per cent yesterday after it was confirmed it will be shedding jobs at its headquarters in Helsinki in the wake of the announcement.More than 1,000 of Nokia's Finnish employees walked out yesterday in protest at the planned cuts.

Mr Elop, 47, joined Nokia from a senior executive position at Microsoft last year, and is under intense pressure to reverse the company's market share losses to North American and Asian competitors.