Nokia and Microsoft: a partnership made in heaven?

You can't accuse Nokia of lacking guts. By throwing its lot in with Microsoft it's going to annoy many of its loyal developers, and if it doesn't create something new and exciting very quickly it's essentially just told the world: "Don't buy our phones! They're crap!"

The share price has already dropped, which suggests the markets aren't convinced. But it's a big brave move that could really reap rewards.

In mobile, Microsoft and Nokia are more similar than they might seem. Both firms have been in the phone business for a very long time, and both firms have made a lot of money from that business - so much money that they were more interested in prolonging the status quo than creating something genuinely innovative.

If it weren't for those pesky Apple and Android kids, they'd have gotten away with it.

The big problem with Nokia is that it's primarily a hardware company, and smartphones are all about software.

We've all heard the stories of Nokia's software guys setting out the necessary specs for Symbian, only for the hardware guys to go "Mwah hah hahhhhhhhh!" and ignore them completely. The result: brilliant hardware and not so brilliant software.

That matters because the mobile market is changing, and changing fast. Soon, most phones will be smartphones. To compete in that space, Nokia needs a decent smartphone OS. With Windows Phone 7, it might just have found it.

History isn't repeating

This isn't history repeating. Yes, Palm adopted a similar tactic a few years back when it embraced Windows Mobile - a strategy that worked so well Palm doesn't exist any more (it was bought over by HP). What's different here is that WIndows Mobile was a bit of a donkey, and Windows Phone 7 isn't.

So what's in it for Microsoft? Money, surely, but much more importantly Windows Phone 7 gets an enormous boost in market share. If this were a school disco Microsoft has gone from slouching at the back of the hall to jigging around in the spotlight with the cool kids.

It gives Bing more of the mobile search market, it gives Windows Phone a global payment platform, it makes Microsoft Marketplace a much bigger deal and it means Microsoft can flog more copies of its developer tools. It also brings some seriously big hardware brains into the Windows Phone camp, which is never a bad thing.

Nothing in tech is certain, of course, and the whole partnership could end in disaster. But I'm really excited about this. Nokia makes stunning hardware, and Windows Phone 7 is a really nice mobile OS.

Bringing the two together should result in some really smart smartphones, and I can't wait to see what the combined brains of Microsoft and Nokia come up with in the near future.

Here's to a beautiful new friendship.