The fact that Nokia's new chief had to deal with a long-shot of a rumor regarding a supposed buyout deal from Microsoft - at a big discount to its current valuation - shows how far the world's largest mobile phone company has fallen.

Rampant piracy means Microsoft's revenues in China this year will only be about 5% of what it gets in the US, even though personal-computer sales in the two countries are almost equal, CEO Steve Ballmer told employees in a meeting.

Nokia's Windows Phones will start coming out at a relatively rapid clip after the first one appears later in 2011, said Jo Harlow, Nokia's executive vice president of smart devices.

Microsoft will buy Nokia's mobile division for US$30bn, and the deal will be completed this year because "both companies are very much in a hurry."

Microsoft has confirmed that it has agreed to buy Internet phone service Skype. The deal will see Microsoft pay US$8.5 billion for Skype, making it Microsoft's largest acquisition.

Microsoft is close to a deal to buy Internet phone company Skype Technologies for between US$7 billion and US$8 billion, according to people familiar with the matter, adding that the deal could be announced as early as Tuesday.

Nokia, the struggling market leader in mobile phones, has said that it intended to cut costs by nearly 20% over three years, a move that will likely eliminate thousands of jobs as it enters an alliance with Microsoft.

Nokia workers are bracing for what may be the steepest job cuts in almost two decades as the company prepares to start a partnership with Microsoft. A reduction in R&D activities is set to be announced by the end of April, with as many as 6,000 jobs under threat.

Microsoft may be struggling against Apple and Google to win the hearts of consumers, but the company can take pride in at least one achievement: Kinect, its hands-free controller for the Xbox 360, is now the world's fastest-selling consumer electronics device.

In the short term, this deal certainly favors Nokia. The company will still be spending money on Symbian development-the company is expecting to ship 150 million of the handsets in the next couple of years-but will be able to scale back this expenditure, as its operating system development costs are increasingly pushed onto Redmond. This, plus the cash infusion, gives the company instant savings.

If true, this report confirms the February statement of Intel CEO Paul Otellini, who said Microsoft has paid Nokia an "incredible" amount of money for the smartphone deal.

The solution is really simple. What if they aim at a different target? What if Apple and Google aim at the youth marketplace, and Nokia and Microsoft aim at the older adult space? This has not been tried yet.

Any payouts or incentives to continue MeeGo development emphasize that Nokia's eggs are not all in Microsoft's basket when it comes to smartphones-or other devices, for that matter. MeeGo is an open-source platform that can power handsets, tablets, and netbooks, which may be why Nokia isn't letting go of MeeGo just yet.

"We have identified a technical issue with the Windows Phone update process that impacts a small number of phones," a Microsoft spokesperson wrote in a Feb. 23 email to eWEEK. "In response to this emerging issue, we have temporarily taken down the latest software update for Samsung phones in order to correct the issue."

Losing the deal to Google could have landed a fatal blow to Microsoft's chances in the mobile market.

"I don't envision us using Microsoft. I would never say never but it's not something we're entertaining now," said Christy Wyatt, corporate vice president of software and services product management for Motorola.

Nokia said Friday it will establish a broad strategic partnership with Microsoft, adopting Windows Phone as its main smartphone platform.

Nokia may announce as soon as Friday a partnership with Microsoft or Google to adopt a new operating system.