By Georgina Prodhan
LONDON (Reuters) - Work has begun on the first Nokia smartphones based on Microsoft software, according to Nokia Chief Executive Stephen Elop, who does not expect Microsoft to try to buy his company.
Elop was recruited last year to rescue Nokia from increasing irrelevance at the high end of the market, and is under huge pressure to produce results after announcing a partnership in smartphones with Microsoft last month.
Elop, who left a Microsoft executive post to join Nokia last September, said he could see no good reason for Microsoft to try to buy Nokia, after the two companies announced a partnership in smartphones last month.
"I'm not aware of a strategic interest that Microsoft would have in the rest of the business," Elop told Reuters this week.
"To the extent that a partnership has been formed around what they're really interested in, then what would an acquisition bring other than a good year of anti-trust investigation, huge turmoil, delays?"
Almost half of Nokia's handset revenues come from more basic mobile phones, which are popular in emerging markets. The company has struggled to establish its brand in the United States, especially since Apple launched its iPhone.
Nokia also considered partnering with Google, but decided it would be too difficult to differentiate its smartphones from a multitude of other Android devices made by the likes of Samsung or HTC.
Nokia's chairman has said Windows-based Nokia phones will be on sale from 2012, although Elop has said he aims to produce a Windows phone by the end of this year.
"We're right now, today, having people work on the first Windows Phone devices from Nokia. That work is already under way. If this was an acquisition scenario, that wouldn't be possible," Elop said.
The agreement between Nokia and Microsoft still has to be finalized, something that Elop has said he expects to happen in the next couple of months.
Elop added that he had no current plans to change Nokia's top management, after only one ex-senior executive was dropped in Elop's new line-up announced last month. A wider cull had been expected, after a German magazine report.
"Now what happens is accountability. If someone's not succeeding they need to be helped or they need to be moved along. In my context, that will absolutely be the case," said Elop, dismissing the earlier magazine report as nonsense.
"So there's a team in place. It's now a new team of my new leadership, newly minted in terms of their new roles. Now they have to perform."