Nokia Likely to Get 'Smart' with Windows or Android

Nokia is preparing to join forces with Microsoft or Google, or even both, in a bold bid to reenter the U.S. smartphone market.


CEO Steve Elop is expected to announce a new operating system partnership during the company's analyst day Feb. 11, and analysts say Microsoft's Windows Phone 7 or Google's Android software are the likely choices.

Elop was plucked from Microsoft last year to marshal a turnaround that would pull Nokia out of its lethargic slump and better compete with the likes of Apple , Samsung and Research In Motion .

Elop offered only hints at what direction his company was going, like how the strategy would be "elegant in its simplicity."

Analysts took some guesses at door 1 and door 2.

"Moving to Windows 7 is probably not as 'simple or elegant' as moving to Android and does not bring Nokia into a much larger ecosystem," Morgan Stanley analyst Ehud Gelblum wrote in a note Friday.

But the fact that Elop hails from Microsoft has always presented a more obvious preference.

"Microsoft and Nokia makes a lot of sense for both parties," said Roger Entner of Recon Analytics, a Boston-based wireless research and strategy shop. "Microsoft would give Nokia a global phone presence. And with Android, they would just be one of many players," Entner said.

One thing seems certain: The current plan isn't the best option.

"Staying with Meego or Symbian in smartphones would probably be seen as the worst strategy by investors," Gelblum wrote.

Nokia posted another decrease in earnings and a continued drop in market share to 31% from 35% in the year-ago period Thursday.

But shares of the Finnish phone shop were up 3% Friday in anticipation that any new strategy from Elop would be a positive development.

CNBC Data Pages:


TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.