Microsoft produces its own operating systems (OS) for smartphones, but compared to other players it is small in the market. The Windows smartphone OS had a 3.3 percent share of the total smartphone market, compared with Google Android's 78.6 percent and Apple's 15.2 percent in 2013, according to data from IDC.
In a statement released on Friday, Microsoft boss Satya Nadella said the latest move by the company would help with its "transformation". A Microsoft spokesperson told CNBC via email that the deal with Nokia was a "milestone", but integrating the new business would "take some time to complete".
Around 80 percent of the smartphones running a Windows operating system are already manufactured by Nokia, according to data provider IHS, making the telecommunications company an ideal partner for Microsoft. Control of Nokia's handset arm could help Microsoft bolster its smartphone offering.