The two companies said they will "leverage each others' strengths in e-mail, instant messaging and maps and navigation services." The deal will make Nokia the exclusive global provider of Yahoo maps and navigations services, while Yahoo will become the exclusive provider for Mail and Chat services in Nokia's Ovi platform.
"Delivering great user experiences -- both online and on your mobile -- is what this alliance is all about," Nokia CEO Olli-Pekka Kallasvuo said. "We're enabling millions of Yahoo customers in key markets including North America to discover the unique capabilities that Ovi Maps brings."
At an accompanying press conference Monday, Kallasvuo admitted that Nokia has failed to make a splash in the U.S. smartphone market. This as Nokia remains the dominant force in the global market, carrying the lion's share of smartphone sales, as well as all cell phones.
"We are an unusual global company in the sense that we are clearly a global leader in our industry, and yet we do not lead in the U.S.," Kallasvuo said.
Nokia, a Finnish handset maker, has felt threatened by Apple as the iPhone has seen tremendous year-over-year growth, as Nokia, while still dominant, has lost some footing. One recent study found the iPhone to be the third-largest smartphone platform in the world, with its 15.4 percent behind only Research in Motion (19.4 percent) and Nokia's Symbian (44.3 percent).
Yahoo CEO Carol Bartz and Nokia CEO Olli-Pekka Kallasvuo announce their companies' new partnership.
The two companies are engaged in a number of lawsuits related to patents. The first shot in the legal battle was fired by Nokia last October, when it accused Apple's iPhone of violating patents related to GSM and wireless LAN technology.
Under the terms of the new Nokia-Yahoo deal, select co-branded service offerings will become available in the second half of 2010, with global availability expected in 2011.
"What a combination," Yahoo CEO Carol Bartz said. "We're excited to expand the reach of our best-in-class Mail and Messenger services, bringing personalized experiences to more people across the mobile web, particularly in emerging markets where we are seeding the next generation of Yahoo users."
Nokia's partnership with Yahoo comes as Apple's relationship with Google -- which is the default search provider and powers the Maps and YouTube applications on the iPhone, iPod touch and iPad -- has soured. In the growing rivalry between the two industry giants, Google last week compared Apple to "Big Brother" from the company's iconic 1984 ad. The company also announced Google TV, a new Android-powered platform that aims to take on the Apple TV in the set top box market.
As tension has grown between Google and Apple, one rumor from earlier this year suggested Apple could partner with Microsoft to make Bing the default search provider for the iPhone OS. Currently, the only options available to users are Google and Yahoo.
In addition to search, Yahoo and Apple also have a partnership for software on the iPhone, as the No. 2 search company provides data for the native Stocks and Weather applications found on the iPhone. Apple CEO Steve Jobs even gave a surprise motivational speech to employees of Yahoo in 2007.