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Nokia, Qualcomm in cooperation pact

TOP cellphone maker Nokia said today it would work with Qualcomm to develop handsets in a deal that marks a further warming of ties between the former rivals and could boost Nokia in the US.

Nokia said the phones would use Qualcomm chipsets and S60 software on the Symbian operating system, the most widely-used smartphone software that is currently controlled by Nokia but will eventually be made royalty-free for all users.

The phones would initially be for the North American market and work on third-generation networks. The companies did not say when phones for other markets might be developed.

"The first Mobile devices based on this collaboration are expected to launch in mid-2010 and be compatible with the forthcoming Symbian foundation platform," Nokia said in a statement.

The deal marks the first time Nokia will use Qualcomm chipsets in its 3G phones, and brings the firms closer together after years of bitter disputes over intellectual property rights and royalty payments.

The companies agreed last July to a 15-year settlement that included a hefty 1.7 billion euro one-time payment from Nokia.

The agreement also comes against the backdrop of an ailing cellphone market, with 2009 sales set to drop as consumers rein in spending on new gadgets due to the economic recession.

"In the end of the day Qualcomm needs Nokia as much as Nokia needs Qualcomm," said Gartner analyst Carolina Milanesi.

Nokia shares were down 1.9 percent at 9.13 euros on a weaker Dow Jones Stoxx European Technology Index.

"I don't see the markets reacting since the products are expected to be sold only around mid-2010," said Nordea analyst Martti Larjo. "(But) at least the cooperation shows that Nokia is focusing its efforts on the North American market."

Nokia has long struggled in the US market. North American sales dropped 20 percent year-on-year in the fourth quarter, and Nokia's North American market share of some 8.7 percent was well below its global figure of 37 percent.

Separately Nokia said it had tapped Broadcom, a current supplier of second-generation technology chips, to also supply 3G chipsets.

"This agreement, which targets low cost, high volume markets, demonstrates that we view Broadcom as a reliable supplier to bring the benefits of 3G to Nokia customers around the world," Nokia said in a statement.

"The battle for the control of emerging markets is moving quickly into 3G," Gartner's Milanesi added.


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