Yahoo Mail and Messenger will power Nokia's mobile mail and chat services starting later this year, the companies announced during a press conference on Monday.
It's the latest change to Nokia's Ovi internet services, which include mail, chat and maps and used to include photo sharing and social networking services.
In addition, Nokia will become the provider of Yahoo's maps and navigation services on PCs. Nokia now owns Navteq, a mapping services company.
For Yahoo, the deal appears to be an effort at deepening its mobile reach in international markets. "For us, this alliance has an especially important application in the developing world," said Carol Bartz, CEO of Yahoo, at a press conference to announce the partnership. "Nokia has by far the strongest track record in these markets and now Yahoo gets to leverage that position."
The deal will also help Yahoo improve its map offerings by using Nokia's Navteq mapping services. "As for Yahoo maps, many of you know we haven't been focused a lot on our maps platform. This changes that," said Bartz. "By using Nokia's maps and Navteq services, it will be a much richer experience for users."
The partnership could indeed help Yahoo extend its global reach. Nokia, the number one mobile phone maker in the world, has grown that large in part by competing to offer some of the lowest cost phones in developing markets.
Ovi Mail, Nokia's mail service, has 9 million customers around the world, Bartz said. Yahoo Mail has 300 million users, said Olli-Pekka Kallasvuo, CEO of Nokia.
He said the partnership will allow Nokia to offer "an even better experience to people everywhere", including North America. Despite being the biggest seller of phones in the world, Nokia has only a tiny market share in the US.
"This is one step we are taking to change that. As we continue to get more of our devices available through US operators, we expect this alliance will be crucial in growing Ovi services across the mobile web," he said.
While Yahoo lags behind its competitors in search, Kallasvuo said its mail and chat services are number one in the US on PCs and mobile phones.
Nokia began offering a variety of Ovi-branded web services a few years ago and has had mixed success. While it has attracted a fair number of mail users, it has dropped its social networking application and stopped investing in a photo-sharing service. This partnership appears to be an effort to improve its mail and chat offerings.
Neither company appears set to drop their branding as part of the partnership. The Nokia services will be called Ovi Mail and Ovi Chat "powered by Yahoo." Yahoo's maps will similarly be called "powered by Ovi".
The companies said that some of the services will become available in the second half of 2010, with global availability expected in 2011.
While at first glance it doesn't appear that this partnership would derail the momentum behind Google's Android mobile operating system, Yahoo and Nokia may have one important advantage. "It also offers major benefits to mobile operators around the world," said Kallasvuo. "It represents two operator-friendly companies joining together to provide services that will engage and delight customers."
It is clear that mobile operators are suspicious of Google and its potential to corner revenue streams that operators would like for themselves. Their suspicion is evident in a few examples where operators have included Yahoo or Bing search or other services on Android phones instead of Google's offerings.