Microsoft and Nokia announced an alliance to bring advanced business software to smartphones in an attempt to counter the dominance of Research in Motion’s BlackBerry devices and the growing threat from the Apple iPhone.

The partnership between the world’s largest software company and the largest mobile phone maker means that the latest online versions of Microsoft’s dominant Office suite of applications, including Word, Excel and PowerPoint, will be available on a range of Nokia handheld devices.

The two companies, once fierce rivals in the mobile telecommunications business, expect to offer Nokia phones running Office sometime next year, targeting the lucrative business users market.

Robert Andersson, Nokia executive vice-president, said: “This is giving some of our competitors — let’s spell it out, RIM — a run for their money. I don’t think BlackBerry has seen the kind of competition we can provide them now.”

The rise of smartphones, on which users can browse the web and edit documents and presentations on the move, have presented software makers and mobile phone manufacturers with a new market to conquer.

Worldwide mobile phone sales totalled 286.1 million units in the second quarter of 2009, a 6.1 per cent decrease from the second quarter of 2008, according to Gartner, the research company. Yet smartphone sales surpassed 40 million units, a 27 per cent increase from the same period last year, representing the fastest-growing segment of the mobile devices market.

Microsoft is looking to bolster its Office franchise, which is nearly ubiquitous on personal computers and is vital to its profits. The company is already planning to launch web versions of Word, Excel, PowerPoint and OneNote, expanding its reach to make it compatible with all leading browsers on both PCs and Macs.

Until now only phones running Microsoft’s own Windows Mobile software have been able to use Office fully.

The alliance may also counter Google’s moves into free online software, which has been aimed at Microsoft’s business customers.

John Jackson, an analyst at the wireless research company CCS Insight, said: “It’s clear Nokia and Microsoft are both facing competitive challenges, most notably from Google. It makes sense for these two companies to work together to see if they can pool their competitive strengths to try and counter some of this pressure.”

The alliance means that Microsoft’s new Office suite of applications could be available to a much wider audience. Nokia accounts for 45 per cent of smartphones worldwide, with about 200 million users, according to Gartner.

The two companies emphasised that the venture would not affect the future of Microsoft’s Windows Mobile and Nokia’s Symbian operating systems. Executives said that Nokia had no plans to make a Windows Mobile device.

The announcement builds on Nokia’s drive to optimise access to e-mail and other personal information with its Exchange ActiveSync feature.

Meanwhile, a US federal court ruled that Microsoft would have to pay more than $290 million (£176 million) in damages to i4i, a Canadian software company, for infringing a patent. The Toronto-based i4i, a privately held maker of software for manipulating documents, had claimed in a 2007 lawsuit that Microsoft knowingly infringed one of its patents. Microsoft said that it planned to appeal.

Lower charges may mean higher call costs

Forcing down wholesale network charges will not lead to lower phone bills, mobile phone companies including Vodafone and O2 have warned Ofcom, the industry regulator. Telecoms groups, responding to Ofcom’s proposal to potentially alter the way that mobile termination rates (the cost an operator pays to connect a call to a rival network) are regulated, believe that cutting the rates could lead to higher call costs and lower handset subsidies. The shift threatens to cost the industry hundreds of millions of pounds in revenue a year.

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