Nokia has announced plans to form a "broad strategic partnership" with Microsoft.
The deal would see Nokia use the Windows phone operating system for its smartphones, the company said.
Microsoft's Bing will power Nokia's search services, while Nokia Maps would be a core part of Microsoft's mapping services.
Earlier this week Nokia chief executive Stephen Elop sent a memo to staff warning that the company was in crisis.
The new strategy means Nokia's existing smartphone operating systems will be gradually sidelined.
Symbian, which runs on most of the company's current devices will become a "franchise platform", although the company expects to sell approximately 150 million more Symbian devices in future.
The announcement is widely seen as a response to the growing pressure from other smartphone platforms, including Google's Android and Apple's iPhone.
"This is a clear admission that Nokia's own-platform strategy has faltered," said Ben Wood, an analyst with research firm CCS: Insight.
"Microsoft is the big winner in this deal, but there are no silver bullets for either company given the strength of iPhone and Android," he added.
Nokia's share of the smartphone market fell from 38% to 28% in 2010, according to research firm IDC.
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