Will Nokia-Microsoft deal be able to challenge Apple & Google in mobile space?

Nokia's new chief executive has fluffed his big moment. Stephen Elop has tied the fate of the Finnish handset maker to Microsoft in a strategic partnership designed to regain ground in smartphones amid brutal competition from Apple and Google. The tie-up is Nokia's least bad option if it doesn't want to turn into a commoditised handset maker. But Elop's hotly anticipated strategic overhaul falls short by several measures.

The Microsoft alliance is radical. It means Nokia effectively ditches its proprietary Symbian software platform which has over 200 million users in favour a Windows operating system. This is an economic and psychological shift:

Symbian accounted for half of Nokia's sales in 2010, according to Arete Research. A successful partnership would bring brand awareness and reach to Windows Phone and help the Finnish group defend its 29 percent gross margin in the handset business. Microsoft's added financial muscle will also be a big boost in technology development.

Action was needed. Nokia's value has rapidly eroded with its market share. Its stock has shed 70 percent in little over three years; the Finnish group is now just one-tenth the size of Apple. During the same period, Google's Android operating system has come from nowhere to the point where it is about to overtake Nokia's Symbian platform for the top spot in the global smartphone space in terms of handset sales.