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Will Nokia License Windows Phone?

Nokia's shares rose for the fourth consecutive day, apparently on rumors that the struggling phone maker is going to abandon its Symbian operating system in favor of Microsoft's Windows Phone 7.

The company has scheduled an announcement for next Friday. Though the nature of the event, to be held in London, was not revealed, Nokia CEO Stephen Elop is scheduled to brief investors. The rumors perpetuated upon the publication of a letter yesterday by analyst Adnaan Ahmad of Berenberg Bank in Hamburg, urging Elop and Ballmer to form an alliance.

Elop, who was president of Microsoft's Business Division until late last year, could also decide to license Google's Android platform, which has 53 percent of the phone market, according to NPD, though Ahmad's letter details why doing so would not be in Nokia's interest. Licensing either platform, or both, would be a departure for Nokia, which until now has remained wedded to Symbian.

Nokia sold 450 million phones in 2010 and it would be a strong channel for Windows Phone 7, Pete Cunningham, an analyst at Canalys told The New York Times. "For Nokia, Microsoft would be a strong domestic ally, helping it to crack the U.S. market," The Times reported.

Still, only 2 million phones running Microsoft's Windows Phone 7 have sold, according to Microsoft. Perhaps an alliance with Nokia would be enough to boost Microsoft's fortunes but both have some pretty well-established rivals to beat. Still, since smart phones represent only 25 percent of all phones shipped, it may be too early to declare any winners. But with the momentum of Android and Apple's iPhone, it's sure hard to bet against them at this time.

Posted by Jeffrey Schwartz on February 03, 2011