Nokia is going to have to do the unthinkable in the coming weeks and months and align itself with one of the other two OS platforms out there. They are going to have to either join up with Microsoft (MSFT) Windows 7 or Google's (GOOG) Android. With (Nokia CEO) Elop's background and familiarity with Microsoft, it is likely to be the frontrunner, though from an outsider's perspective, Nokia would have more long term creative control of its destiny with Android.
Nokia's fortunes have turned sour to be sure (see their CEO's rather bleak assessment
), but are they so desparate that they need to team up with the industry's other prominent loser and offer WP7 on Nokia hardware?
Microsoft is probably desparate to find a friend in the smartphone world, even one that's down on its luck. I'm sure there's a lucrative offer on the table.
I actually test drove a WP7 phone a couple of weeks ago, and it didn't make me throw up bile like I expected. It's functional in the space it plays in, but that space is probably more downmarket than Nokia is looking for.