Stung by falling market share and Apple’s iPhone ascendancy, unlikely bedfellows Nokia and Microsoft are hatching a few joint plans to unseat the smartphone champion, and it seems Office support in Nokia handhelds will be part of this attack.

Microsoft today will announce an alliance with Nokia, an alliance which seems set to spawn a new era of Office suite app compatibility on Nokia phones.

This news comes as the Redmond beast prepares to introduce Windows 7 (at higher prices than Snow Leopard), and hatches plans to boost its mobile OS and Office software offerings.

It’s thought the alliance will see Nokia devices enabled to access Microsoft’s purported future software as a service offering based on its Office products.

That announcement will be given by Stephen Elop, head of Microsoft’s Business Division and Kai Oistamo, executive vice president of Nokia Devices, Reuters explains.

In a second pronged attack, Nokia is expected to launch its own Music Store (in India) later this month, offering users of its handset a catalogue of music and movies to purchase through their handset.

India is a potentially huge market for Apple, but competing handset makers there have a major price advantage, and this Nokia move also seems set to beat Apple to the punch, as it’s thought to be preparing launch of an iTunes Store in India.

With a value conscious market, Nokia has a further string to its bow, and will not charge users for the media they download for the first year.

Nokia is changing its business plan from relying on hardware sales to developing a business as a services operator, claims the Economic Times.

“We want to generate revenues through services and music is one of them. We will soon launch our online digital stores,” Nokia marketing director Vineet Taneja told ET.

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