Earlier, Ryan Paul was rather down about the announcement that Nokia and Microsoft were partnering, and that Windows Phone 7 would be Nokia's primary smartphone platform. It might work out well for Microsoft—it gives the software company a strong hardware partner with substantial international reach. But, for Nokia, he felt it meant the loss of control over its own destiny: Nokia is going from a vertically integrated supplier, building hardware, software, and online services, to just another handset builder, like HTC, Samsung, LG, or even Dell. A huge step backwards.

I'm not so sure. In fact, I think he has it backwards. I think that the advantages to Nokia are clear. Given the scant details revealed so far—perhaps no surprise given that nothing has been formalized just yet—Microsoft is the company in the more difficult position, and it has a lot of questions to answer.

Nokia needs a modern operating system

Nokia, in spite of consistent poor performance in the North American market, is a cellphone powerhouse. The biggest seller of cellphones in the world, it's a consistent technology innovator (for example, Nokia has had phones supporting NFC for several years: technology that other handset companies are only just beginning to integrate). It's also something of a smartphone pioneer; the Nokia Communicators were legendary, and even today the company's smartphone business is substantial.

Substantial, but waning. The Symbian operating system that the company has used for many years doesn't live up to the expectations of today's iPhone-aware smartphone users. We want fluent, touch-friendly, easy-to-use systems with a wealth of applications. Symbian, even in the latest Symbian^3 incarnation that's found on phones like the Nokia N8, doesn't offer that.

In spite of considerable development effort by Nokia, it never appeared that it would be suitable for modern smartphones. In October 2010, the Finns announced that a separate Symbian^4 release was cancelled in favor of incremental updates to the Symbian^3 release.

Nokia's next hope for smartphone salvation was MeeGo, a Linux-based embedded platform co-developed with Intel, Novell, and the Linux Foundation. It's an ambitious project, designed not just for smartphones, but tablets, in-vehicle systems, TVs, and more. At one time it was even intended for netbooks, too. What it lacked, however, was timeliness: it's not clear when MeeGo will actually be good enough to use on the kinds of device that Nokia wants—and needs—to compete with iOS, Android, and Windows Phone 7.

So, as Nokia CEO Stephen Elop wrote in a memo leaked earlier in the week, the company was stuck on a "burning platform." Jumping off that platform might be risky, but it also provides the possibility of salvation. Sticking on the platform will lead to inevitable failure.

Windows Phone 7 is that operating system

With in-house development ruled out, the company had essentially two options: Android and Windows Phone 7. Android might seem the obvious choice, especially with Nokia's existing Linux experience from MeeGo, but Android has its problems. Android manufacturers are already engaged in a vigorous race to the bottom, with cheap and cheerful handsets like the Huawei Ideos (T-Mobile Comet), Motorola Cliq 2, and LG Optimus.

There's a huge number of Android phones on the market, and they're becoming increasingly interchangeable. The only real means of differentation (aside from weird gimmicks) is custom software. Nokia plainly doesn't feel that being "just another Android vendor," in a market tarnished by low-budget, low-margin handsets with non-standard, typically ugly software is the best way to reinvigorate its smartphone niche.

There's also pressure from network operators: they don't want a market dominated by Android at the low and mid-end, with the iPhone taking the high-end. They want competition across every segment, and Windows Phone 7 is believed to be a possible way of achieving that.

With Android out of contention, Microsoft's operating system is the only real alternative. It's risky: it's very much an underdog in the battle for smartphone supremacy, and its success remains far from assured. But it provides what Nokia has consistently failed to develop for itself: a high quality, user-friendly, touch operating system. Nokia's problem is a software problem, and Windows Phone 7 solves that software problem.

Microsoft needs partners

Microsoft's position is more difficult. There are certainly upsides. The two companies made clear that this was a special partnership, and that Nokia isn't just buying Windows Phone 7 licenses from Microsoft in the way that HTC or Samsung do. Rather, the pair will be collaborating to integrate their services.

Some of these collaborations are easy and obvious and already announced, at least in vague terms. Nokia Maps, powered by the company's own mapping data company Navteq, will be integrated with Bing Maps. This integration will, I hope, result in broader availability of street mapping, and the introduction of turn-by-turn navigation support.

Nokia turns out some pretty good hardware, too, and if the leaked pictures are anything to go by, the aesthetic appeal of Windows Phone 7 handsets is set to make a big leap forward. In any case, Nokia's hardware expertise will inform Microsoft's future hardware specifications and platform requirements.

Nokia will also be in a different position compared to other handset vendors when it comes to promotion of the platform. Samsung, HTC, LG, Dell, and Asus all sell smartphones powered by a range of operating systems. None of them want to promote one platform at the expense of another, leaving Microsoft's operating system underpromoted. Nokia, in contrast, is going to transition to using Windows Phone 7 pretty much across the board. This means that Microsoft should receive full-blown support and promotion from the company.