Nokia to develop smartphones running Windows Phone 7

[Update] The reports were correct: statements from Nokia and Microsoft.

Intensifying rumors suggest that Nokia may announce on Friday a partnership with Microsoft and will begin shipping phones running Windows Phone 7 operating system. This would mark a dramatic change of direction for Nokia and the partnership with Microsoft would put future of Nokia’s MeeGo platform in danger.

The first report about talks between Nokia and Microsoft was published in December by Eldar Murtazin. The report was not confirmed by other sources and was met with some skepticism in the media. However, on Tuesday Engadget obtained an unusually honest memo sent by Nokia’s CEO Stephen Elop to his employees. In the memo Elop, who is a former Microsoft executive, is making few key points: Nokia fell behind in high-end smartphone market and is facing growing competition in mid- and low-end markets; in just 2 years Android has taken over Nokia’s leadership position in smartphone volumes; iPhone and Android are successfull not because of their hardware, but because of the ecosystems built around their platforms; Nokia’s MeeGo platform is not coming fast enough to the market; and finally:

… we’re going to have to decide how we either build, catalyse or join an ecosystem.

The “joining an ecosystem” bit caused a storm in the media and multiple sources (Bloomberg, WSJ) now report that talks and possible partnership with Microsoft are real. Nokia is holding investors briefing on February 11 and if an agreement is reached in time, Stephen Elop would announce the deal Friday. WSJ article also mentions Android as a possible choice for Nokia, but after Google’s Vic Gundotra tweeted “two turkeys do not make an Eagle”, Android seems an unlikely candidate (and there’s some history behind the two-turkeys!=eagle line).