Nokia CEO Stephen ElopOn stage at the Mobile World Congress conference in Barcelona yesterday, Nokia CEO Stephen Elop (pictured right) announced that the company’s first priority now, after partnering with Microsoft to use Windows Phone 7 on its devices, is to beat Android.

The company also hinted that we’ll see its Windows Phone 7 devices this year, and it confirmed the concept designs that were floating around the web a few days ago.

Elop, who hails from Microsoft, discussed the nature of Nokia’s relationship with the software company. He said Nokia was considering becoming yet another Android phone manufacturer but that the prospect of being a premiere WP7 partner was more enticing. “A decision to go with Windows Phone creates a very different dynamic. Windows Phone is a challenger. It becomes a three-horse race,” he said. The company’s decision may have also been swayed by European cellular carriers, who feared the worst if Nokia adopted Android.

Elop said Nokia will be paying Microsoft royalties to use Windows Phone 7 but that it will also save money by reducing its operating expense since it will no longer need to develop an entire OS on its own. Nokia will also contribute services to Windows Phone 7 that other manufacturers will be able to take advantage of, and he went on to say, “We’re contributing the fact that we’re making Windows Phone a challenger.”

Microsoft will also add “substantial monetary value” to Nokia because of its contributions to WP7, which Elop specifically said is measured in the billions, not millions. That could mean that Microsoft effectively outbid Google to convince Nokia to use its software. Elop also mentioned that Nokia will see a new source of revenue through advertising.

Together with Nokia’s Jo Harlow, Elop also confronted some tough questions about Nokia’s new partnership. When asked about the widely reported employee walkout on Friday, Harlow seemed understanding of the emotional journey for Nokia engineers, especially with word that Elop plans to make thousands of job cuts. But optimistically, she points out that the deal is also exciting the US market, which hasn’t had much reason to care about Nokia products for the last few years.

When asked if he was indeed the seventh largest Microsoft shareholder (a rumor sparked by his appearance on a shareholder chart with around $3 million worth of stock), Elop said those claims were not true. “That would be a substantial amount of money that I don’t have,” he said. Elop pointed out that he was legally prohibited from selling his shares when he first joined Nokia, but once that was lifted he began selling. Once talks began with Microsoft about partnering with Nokia, he was forced to stop selling once again.

One brave audience member shouted out, “Are you a Trojan Horse?” — a reference to the fact that Microsoft was reportedly trying to buy Nokia last year, but with Elop in charge, he can now run the company to Microsoft’s benefit. Elop pointed out that the entire management team at Nokia was involved in the decision to move to Windows Phone 7 and that the final decision wasn’t made until last Thursday night.

Via Engadget

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