Microsoft, which has dominated the PC and mobile markets for the past two decades, is launching a $2.5 billion deal with Nokia.
The deal, which is expected to close by the end of the year, will combine Nokia’s Windows-based Lumia line of devices and Microsoft’s Windows 10 operating system.
The two companies have previously worked together on some hardware.
The company will reportedly also sell Nokia’s Nokia Lumia 900 and Lumia 950 smartphones and the Lumia 1020 tablet.
“Microsoft is a great partner for Nokia,” Microsoft CEO Satya Nadella said in a statement.
“The new partnership will help us build a truly global software ecosystem that delivers innovative services to our customers across the globe.”
The deal is the latest example of Microsoft working closely with its mobile competitors, including Apple and Google.
Earlier this month, Microsoft announced that it had acquired the Google search engine, which it said would make it easier for its users to search for information.
Microsoft said it would also use its vast expertise in the cloud and other technologies to offer cloud services to businesses.
The acquisition was announced after Nokia announced a $1.9 billion deal to buy Microsoft’s Devices and Services business in January.
The Redmond, Wash., company said at the time that it planned to create a cloud-powered mobile operating system that would integrate with Windows 10.