Windows Phone deal is good news for Microsoft. But what about Nokia?

Windows Phone software will replace Symbian on all Nokia phones, reps for Nokia and Microsoft said today.

Windows Phone 7 software will soon power all Nokia phones, reps for both Microsoft and Nokia announced today, effectively making the global cell phone market a "three horse race" between the Apple iPhone OS, Google's Android, and Microsoft-Nokia. According to Nokia CEO Stephen Elop, Nokia phones will now run the Windows Phone OS, instead of the in-house Symbian OS; in exchange, Nokia would help Microsoft improve its hardware.

Bing, meanwhile, will become the default search engine on Nokia handsets.

“I am excited about this partnership with Nokia,” Steven Ballmer, the CEO of Microsoft, said in a statement released today. “Ecosystems thrive when fueled by speed, innovation and scale.The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.”

Many tech analysts see the deal as a lifeline for Microsoft, which has struggled to stir up buzz around its Windows Phone 7 operating system. "Undoubtedly the biggest winner is Microsoft," writes Adrian Kinsgley-Hughes of ZDNet. "Not only does this move mean that it will inevitably make significant gains in Windows Phone marketshare, it’s also managed to eliminate Nokia’s Symbian OS as a competitor."

Meanwhile, over at PCMag.com, John C. Dvorak agrees that the Windows Phone deal is good for Microsoft – but argues that the whole thing is terrible for Nokia. "[T]his decision is the most risky one it could make," Dvorak argues. "Windows Phone 7 isn't going anywhere. It has no buzz, and Microsoft seems jinxed on some level. After all, Microsoft essentially invented the smartphone over a decade ago, long before the iPhone. Where did it get them?"

As we noted late last month, shipments of Android-powered handsets recently surpassed shipments of Nokia Symbian phones for the first time. That stat came courtesy of British research firm Canalys, which revealed shipments of Android phones reached 32.9 million in Q4 of 2010, compared to the 31 million Symbian-powered shipped in handsets in the same quarter.

Nokia sold 111.5 million smartphones in all of 2010 – enough to make Symbian the top-selling OS of the year – but Android has posted increasingly sharp gains in recent months.

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