Nokia and (Nasdaq: QCOM) are planning to work together to develop advanced UMTS mobile devices, initially for North America. The companies intend for the devices to be based on S60 software on Symbian OS, the world's most used software for smartphones, and utilize Qualcomm's advanced Mobile Station Modem™ (MSM™) MSM7xxx-series and MSM8xxx-series chipsets for cutting-edge processing performance and ubiquitous mobile broadband capabilities.

This announcement is not about Nokia coming out with CDMA handsets.  My perception is that Nokia will leverage Qualcomm to get its foot in the door in the U.S. market, i.e., to make key executive connections with the U.S. carriers, who traditionally shunned the S60 platform. Nokia has not had much success yet within the U.S. so the relationship will allow Nokia to piggyback on Qualcomm's trusted image in the North American cell phone industry.  The first results of the Qualcomm-Nokia partnership will likely be seen in the summer of 2010.  It will be compatible with the upcoming Symbian Foundation OS, announced earlier by Sony-Ericsson "Idou" project (available late 2009).

Nokia CEO, Olli-Pekka Kallasvuo, said at the recent Mobile World Congress in Spain that in today's challenging economic conditions, efficiency and global presence will be crucial.  Nokia had another round of layoffs recently in R&D and production due to a predicted significant decline in phone shipments this year.  Partnering with chip companies such as Qualcomm also presents a way for Nokia to move forward with its strategic projects without in-house cash burn in these financially difficult times.

Another partnering rationale among former fierce competitors is that the worldwide mobile phone industry is undergoing profound changes in the competitive landscape.  Nokia is more concerned about competition in its key markets from Asian vendors (Korea, China, and Taiwan) than from Motorola or other Europe-based suppliers.  At the same time, Asian competitors are trying to limit their dependence on, and the amount of license fees they pay to Qualcomm for use of components and subsystems based on its IP. 

The collaboration was made possible by the fact that in mid-2008 Nokia and Qualcomm announced an out-of-court settlement of their long running patent disputes. 

Contact:
Kai Oistamo, executive VP, Devices, Nokia, www.nokia.com
Steve Mollenkopf, executive VP, Qualcomm, and president of Qualcomm CDMA Technologies, www.qualcomm.com