Microsoft and Nokia have confirmed they are working together to port a version of Microsoft's Office productivity applications onto Nokia handsets.

Microsoft Business Division President Stephen Elop and Nokia Executive Vice President for Devices Kai Oistamo unveiled the alliance - which should give Microsoft leverage against Google and others that are attacking its Office business with free or low-priced, web-based productivity applications - in a teleconference.

Under the terms of the agreement, the two companies will begin working together immediately to design, develop and market productivity applications for mobile professionals, bringing an application called Microsoft Office Mobile to Nokia's Symbian devices, they said in a press statement. They will also do the same for other Microsoft communications, collaboration and device-management software.

The applications will be available first on Nokia's Eseries phones, which are optimised for the business market, but eventually will extend to other Nokia handsets. Microsoft and Nokia also will jointly market the applications to business customers and carriers, they said.

The Microsoft-Nokia deal brings two competitors together. Microsoft's Windows Mobile platform for handsets competes with Symbian, the OS for most Nokia phones. However, Windows Mobile has never really found solid footing in the mobile market, while Nokia's Symbian is still the market share leader for midrange handsets, said Directions on Microsoft analyst Matt Rosoff.

Putting Office applications on Nokia handsets is a savvy business move for Microsoft, he said, and will also help both companies compete against their mutual rivals Apple and Research in Motion, which have made life difficult for both companies in the mobile market. Apple's iPhone remains primarily a consumer phenomenon, while Research in Motion's Blackberry OS is extremely popular with business users.

Next to its Windows OS business, Microsoft's Office business is the primary source of the company's revenue. However, its Office consumer business has been declining, showing that pressure from Google and other less expensive productivity applications is beginning to take its toll at the low end.

To counter this slide, Microsoft also has been working on its own web-based version of Microsoft Word, Excel, PowerPoint and OneNote called Office Web Apps. That offering will be available on PCs through a browser at the same time it releases the next version of Office 2010 in the first half of next year. Office Web Apps is scheduled to be in a technical preview this month.