In a joint statement, Nokia and Microsoft announced Nokia will henceforth adopt Windows Phone 7 as its “primary smartphone strategy.” The two companies are seeking strategies that will keep them relevant in the smartphone market as Apple and Android continue to march towards domination.

[ad#Google Adsense 300×250 in story]Specific details are still in the planning stages, but in a joint letter attributed to Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer, the companies announced that Nokia will “help drive and define” the Windows Phone platform.

Microsoft is counting on Nokia’s expertise in hardware design, language support and broad market reach to help deploy Windows Phone into market segments it hasn’t been able to reach yet. What’s more, Microsoft’s Bing search engine wil be featured on Nokia devices, and Nokia will rely on Microsoft adCenter for advertising services.

in return, Microsoft will use Nokia Maps for mapping services; Microsoft is also expecting Nokia’s billing arrangements with local cell phone operators to help consumers access Windows Phone services in countries where credit card use is low. Nokia’s content and application store, known as Ovi, will be “integrated with Microsoft Marketplace.”

Nokia remains the top smartphone vendor in the world, according to a recent report by market research firm IDC, with 28 percent of the worldwide market. The company shipped 28.3 million units worldwide in the fourth calendar quarter of 2010. Apple is number two with 16.1 percent market share, followed by Research In Motion (RIM), makers of Blackberry devices, and Samsung.

While Nokia showed positive year over year growth, its lead slipped dramatically from the same quarter a year ago, when it held 38.6 percent marketshare. The company recently reported a significant drop in fourth-quarter earnings, as well.

The news of Nokia’s partnership with Microsoft comes days after tech site Engadget posted an internal Nokia e-mail purportedly written by Nokia CEO Stephen Elop, describing Nokia’s diminishing position in the smartphone market in brutally honest terms, likening the company’s prospects to that of a worker on a burning oil rig faced with the choice of burning to death or jumping in the ocean.

Stephen Elop stepped into the top role at Nokia in September, 2010. Canadian Elop replaced Olli-Pekka Kallasvuo to run the Finnish telecom giant. Prior to Nokia, Elop headed Microsoft’s Business Division, where he was responsible for Microsoft Office. Elop was Macromedia’s CEO prior to its acquisition by Adobe.