Will Nokia Help Put the Windows Smartphone in the Game?

Nokia and Microsoft both saw their share prices fall in recent days in the wake of a strategic alliance focused on smart phones.

The market drop suggests investors are unimpressed with Microsoft’s apparent promise to spend billions of dollars to support Nokia’s research and marketing in exchange for Nokia’s decision to put the new Windows operating system on its future smart phones. The two companies announced the preliminary deal on Feb. 11. Financial terms of the deal were not disclosed.

Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer wrote in a joint letter that both companies are incredibly excited about the journey we are on together. There will be challenges. We will overcome them. Success requires speed. We will be swift.

Analysts see the move as a last-ditch effort by both companies to gain a foothold in the smart phone market, currently dominated by Apples iPhone, Googles Android and Research in Motions Blackberry.

Blogger Mary Jo Foley said the move would give the Windows Phone a huge shot in the arm, but stressed it would also benefit Nokia, which will now have an influence over other Microsoft products like Bing, Office Mobile, Silverlight and Visual Studio.

Nokia enjoyed over 50 percent of the world marketshare in global handsets at its peak, but fell to 29 percent last year.