Nokia and Microsoft Juice Smartphone Fortunes: Tech Rumor of the Day

REDMOND, Wash. (TheStreet) -- Microsoft (MSFT) and Nokia (NOK) say they will team up to offer Office software on new devices to better compete with Apple (AAPL), Google (GOOG) and Research In Motion (RIMM).

The planned announcement Wednesday is the second partnership Nokia has struck with big tech giants in two months. In June, Nokia unveiled big mobile device plans with No.1 chip shop Intel (INTC). And Wednesday's pact with Microsoft continues the dramatic shift from the Finnish phone giant's stubborn go-it-alone approach.

The rise of the smartphone challengers like Apple, RIM, Palm and Google's Android operating system have put Nokia on the defensive as its Symbian software powered devices fail to gain much ground outside Europe.

The deal with Microsoft will help put applications like Word and Excel on new Nokia devices and it also opens the way for Office features to run on bigger mobile data devices on faster wireless networks.

"This alliance could be part of Nokia's previously announced efforts to extend into larger screen-sized devices," writes JPMorgan analyst Steven O'Brien in a note Wednesday.

Nokia has enlisted its manufacturing partner Foxconn in an effort to build mini-laptops and netbooks that will run on 3G and 4G wireless networks.

Nokia also has plans to introduce a new crop of smartphones currently being developed under the project name Nautilus. These smartphones, due out early next year, have haptic or vibrating touchscreens and "hidden slide-out" QWERTY keypads.

To date, Nokia's attempts to win business customers to its phones have been limited -- largely due to RIM's success with fast, secure BlackBerry email service. Putting Office and, presumably, Microsoft Exchange software on a new generation of Nokia devices would give the company more business appeal.