Microsoft suddenly becomes a mobile behemoth --- Nokia chooses Windows Phone 7

Windows Phone 7 today went from also-ran to contender as Nokia and Microsoft announced a far-reaching deal for Windows Phone 7 to power Nokia phones. For the first time in years, Microsoft is relevant in the mobile market.

Although details are somewhat lacking, Windows Phone 7 will replace MeeGo and Symbian as the operating system for Nokia phones. Nokia, by the way, won't abandon Symbian immediately. Instead, according to the New York Times, Symbian will "become a franchise business and that Nokia expected to sell another 150 million mobile phones before halting development."

The move goes well beyond an agreement to use Windows Phone 7 on Nokia devices -- the companies also announced a broad strategic alliance that includes Bing, Nokia maps, development tools, and more.

On the official Nokia blog, an open letter from Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer said that under the agreement:

• Nokia will adopt Windows Phone as its primary smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.

• Nokia will help drive and define the future of Windows Phone. Nokia will contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.

The blog added that Bing will power search "across Nokia devices and services" and that Microsoft adCenter will power advertising services.

There's a lot more as well. But the real takeaway here is that Windows Phone 7 will power the phones of the largest phone maker in the world, that Bing will power search, and that Microsoft will run the ad services.

That's a trifecta for Microsoft if there ever was one. The company will now have massive, worldwide distribution for Windows Phone 7. And it will share in revenue from the ads delivered on phones, due to Bing and Microsoft running the ad network on phones.

At a joint press conference with Ballmer, Elop correctly noted that in the phone business, "the game has changed from battle of devices to war of ecosystems." Before today's announcement only two of those ecosystems really counted for smartphones --- iOS and Android. Today, Windows Phone 7 makes three.

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