Nokia CEO Stephen Elop has confirmed that his company has starting working on the first Nokia smartphones powered by Microsoft's Windows Phone operating system. At the same time, he has also denied rumors that Microsoft wants to buy Nokia outright. The agreement between Nokia and Microsoft, which was announced last month, still has to be finalized; this will occur sometime in the next couple of months.

"I'm not aware of a strategic interest that Microsoft would have in the rest of the business," Elop told Reuters. "To the extent that a partnership has been formed around what they're really interested in, then what would an acquisition bring other than a good year of anti-trust investigation, huge turmoil, delays? We're right now, today, having people work on the first Windows Phone devices from Nokia. That work is already under way. If this was an acquisition scenario, that wouldn't be possible. Now what happens is accountability. If someone's not succeeding they need to be helped or they need to be moved along. In my context, that will absolutely be the case. So there's a team in place. It's now a new team of my new leadership, newly minted in terms of their new roles. Now they have to perform."

We've been debating on when Nokia will release its first Windows Phone device; will it be in 2011 or in 2012? Nokia's chairman has said Windows-based Nokia phones will be on sale next year, but Elop has said he is aiming to produce a Windows phone by the end of this year. Nokia's transition from Symbian to Windows Phone is, however, expected to take at least two years.

As we've already underlined before, Windows Phone 7 is not mentioned anywhere in the Nokia-Microsoft announcement: the two companies simply refer to the OS as Windows Phone. It's thus quite possible that Nokia will start by pushing out Windows Phone 8 on its higher-end devices.