Nokia Forms Strategic Alliance with Yahoo!

On May 24, Nokia (NOK) announced a new “strategic alliance” with Yahoo! (YHOO). The goal is to increase Nokia’s smartphone presence in the United States and for Yahoo! to power e-mail and instant-messaging services for the Ovi platform. The two companies said they will “leverage each others’ strengths in e-mail, instant messaging and maps and navigation services.”

The deal will make Nokia the exclusive global-provider of Yahoo!’s maps and navigations services, while Yahoo will become the exclusive provider for Mail and Chat services in Nokia’s Ovi platform.

Nokia CEO Olli-Pekka Kallasvuo said: “delivering great user experiences — both online and on your mobile — is what this alliance is all about. We’re enabling millions of Yahoo! customers in key markets including North America to discover the unique capabilities that Ovi Maps brings.”

At an accompanying press conference, Kallasvuo admitted that Nokia has failed to make a splash in the U.S. smartphone market. Nokia, however, remains the dominant force in the global market with the lion’s share of smartphone and cell-phone sales. “We are an unusual global company in the sense that we are clearly a global leader in our industry, and yet we do not lead in the U.S.,” Kallasvuo said.

Nokia, a Finnish handset maker, has felt threatened by Apple as the iPhone has seen spectacular year-over-year growth. Nokia on the other hand, while still dominant, has lost some market share. One recent study found that the iPhone is the third-largest smartphone platform in the world, with 15.4 percent of the market. The leaders are Research in Motion (RIMM) with 19.4 percent and Nokia’s Symbian with 44.3 percent.

The two companies are engaged in a number of lawsuits related to patents. The first shot in the legal battle was fired by Nokia last October, when it accused Apple’s iPhone of violating patents related to GSM and wireless LAN technology.

Under the terms of the new Nokia-Yahoo! deal, select co-branded service offerings will become available in the second half of 2010, with global availability expected in 2011. “What a combination,” Yahoo CEO Carol Bartz said. “We’re excited to expand the reach of our best-in-class Mail and Messenger services, bringing personalized experiences to more people across the mobile web, particularly in emerging markets where we are seeding the next generation of Yahoo users.”

Nokia’s partnership with Yahoo! comes as Apple’s relationship with Google (GOOG) has soured. Google is the default search-provider and powers the Maps and YouTube applications on the iPhone, iPod touch, and iPad. The company also announced Google TV, a new Android-powered platform that aims to take on the Apple TV in the set top-box market.

In addition to search, Yahoo! and Apple (AAPL) also have a partnership for software on the iPhone, as the No. 2 search company provides data for the native Stocks and Weather applications found on the iPhone. Apple CEO Steve Jobs even gave a surprise motivational speech to employees of Yahoo! in 2007.