Microsoft's Windows Phone 7 platform got a big boost on Friday when Nokia said it would adopt the software as its primary smartphone OS.
The announcement puts to bed days of speculation about what Nokia would do to catch up with Apple's iPhone and Google's Android.
Nokia CEO Stephen Elop previously conceded that Nokia's own initiatives around the Symbian and Meego platforms had failed to keep pace with the competition.
Elop hopes the new partnership will change that.
"Together we will bring consumers a stellar mobile experience with great hardware, software and services. We will create opportunites beyond anything that currently exists."
Nokia phones based on Windows Phone 7 will combine the company's own Nokia Maps product with Microsoft platforms such as Bing, Office and Xbox Live.
"From a competitive standpoint, the combination of MS and Nokia will allow the Windows Phone ecosystem to really have an unparalled footprint."
With the new strategy, Nokia is hoping to put an end to a downward spiral that started in 2007, when Apple's iPhone arrived and Google announced Android.
At the time, Gartner put Nokia's market share at almost half the smartphone compared to Apple's 2.7 percent. At the end of last year, Nokia's had dropped to 31 percent, Android had caught up and Apple had increased its market share to 16 percent.
But Windows Phone 7 is far from a safe bet. Phones began arriving late last year and the platform hasn't yet generated the buzz see with Apple's iOS or Android.