Nokia MicrosoftAlthough Nokia and Microsoft already have a strategic partnership that sees the mobile device maker moving all of its operating system business over to Windows Phone 7, is it possible that there is more going on?

Eldar Murtazin, a well-known Russian tech blogger that is known for breaking stories about Nokia, has said that Microsoft is looking into buying the mobile phone division of the company.  According to Android and Me, the talks supposedly would start next week with a target of the deal being closed by the end of the year.  This would see Microsoft start producing its own handsets as well as licensing the operating system out to other companies such as HTC.

Despite Mr. Murtazin having a reputation for breaking Nokia stories early, the company seems to be taking umbrage at the rumor as demonstrated from the following tweet from Mark Squires, UK Communications Director for Nokia.

Nokia tweet

We won’t know how valid this rumor is until the deal does or doesn’t come through.

The issue with this concept is if Microsoft wants to increase its market share, it’s going to need to work with as many manufacturers as possible.  This is what has led to Google’s success with Android, and if Microsoft chooses to make its own handsets this could damage those relationships.  Why would HTC or other companies want to give money to Microsoft when they are effectively competing with one another?  A potential deal that would see the company making its own handsets could actually be the worst move for the company, especially in these early days where every tenth of a percent of market share counts.

Again, at this point, this is all rumor, but the source has a very solid track record, and just because someone from Nokia denies it doesn’t mean that it really isn’t happening as companies try to conceal negotiations all the time.

What do you think?  Should Microsoft be looking into making its own handsets for Windows Phone 7?

[via Android and Me]