Nokia's ( NOK) going nutty for netbooks.Nokia, the No. 1 mobile phone maker, has sealed its plans to enter the netbook race, according to people familiar with the company. Some if not all of the production of the new mini-PCs will be handled by one of Nokia's original device manufacturing partners, Taiwan's Foxconn, these people say. The news comes as Foxconn closes in on a deal to lease the former Nokia manufacturing facility in Fort Worth, Texas, according to a report in the Star-Telegram. Foxconn is one of the world's leading notebook contract manufacturers. Nokia hinted in February that it was at the crossroads of mobile phones and PCs and that it was "looking very actively" at making netbooks. Skeptics figured the move would get Nokia tangled in an expensive race to the bottom against lower-cost manufacturers like Asus and Acer. But netbooks seem to be an irresistible opportunity for PC makers. Hewlett-Packard ( HPQ), Dell ( DELL) and even Apple ( AAPL) are expected to fashion devices for the bargain-hungry netbook crowd. Nokia's partnership with Foxconn would help shield the Finnish phone shop from some of the high costs of developing and making an entirely new product. Foxconn could also begin production more quickly than if Nokia took on the challenge alone. Nokia originally struck a deal with Foxconn a few years ago when it needed a manufacturer to build phones for Verizon ( VZ). This is a particularly juicy aspect to the speculation since Foxconn licenses wireless technology from Qualcomm ( QCOM).
And as a story first reported by TheStreet.com last week showed, Verizon has passed at least one netbook through its network testing process in preparation to sell subsidized (read: cheap) netbooks with two-year wireless service contracts. Nokia would like to regain some business in the U.S., where it has been particularly unbending in its cooperation with telcos. Netbooks could open a new door.