Microsoft, Nokia Take Aim at BlackBerry

Giants Strike Alliance to Bring Office and Collaboration Software to Nokia's Cellphones

By The Wall Street Journal

Microsoft Corp. and Nokia Corp., once bitter rivals in the mobile market, formed an alliance to strengthen their positions at a time when other competitors have become far more troublesome.

The deal between the two companies will bring Microsoft's Office programs and other software to Nokia phones. It is aimed squarely at the professional market that Research In Motion Ltd. targets so successfully with its BlackBerry line of smart phones.

For Microsoft, the deal is an attempt to increase the appeal of Office -- a lucrative franchise that includes Word, Excel and other productivity programs -- to a business audience that is being courted by competing products from rivals that range from Google Inc. to Cisco Systems Inc. Financial terms of the deal weren't disclosed.

In a conference call, a Nokia executive was particularly blunt in saying the deal represents more of a threat to the BlackBerry maker than to Apple Inc., which is thriving among consumers with the iPhone.

It's about creating a formidable challenger to RIM than anybody else. RIM, which is based in Waterloo, Canada, didn't respond to requests for comment.

Nokia remains the dominant supplier of smart phones, but its market share has been shrinking, falling to 45% of world-wide unit sales in the second quarter from 47.4% in the same period the prior year.

RIM, meanwhile, jumped to 18.7% of the market from 17.3% during the same periods, while Apple soared to 13.3% from 2.8%.

Part of Nokia's problem, analysts say, is that its devices, which rely mostly on the Symbian operating system, have lost technological ground to rivals.

Nokia is suffering right now from having a really old user interface in Symbian. It's not that exciting.

While the Microsoft deal won't provide more eye-catching interfaces for Nokia phones, it could give users a better experience on the go as they try to stay connected to work, whether editing Word documents or viewing Excel spreadsheets.

Microsoft said next year it will offer a Nokia version of an existing product called Office Communicator Mobile that makes it easier for users to be reached through a single phone number, rather than requiring callers to hunt for them by dialing multiple numbers.

The two companies will work on other projects, such as conferencing software that will allow Nokia phone users to participate in teleconferences that use interactive slide presentations.

Microsoft's strategy is to make it tougher for business users to switch to applications from rivals such as Google. Microsoft's approach here is to put an anchor point in ground.