Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer.

Microsoft and Nokia have signed a definitive agreement that cements a partnership first announced in February of this year.

All Things D reports Nokia will adopt Windows Phone as its "primary smartphone operating system" in a bid to maintain its lead in the critical mobile industry.

"Our agreement is good for the industry," said Microsoft CEO Steve Ballmer. "Together, Nokia and Microsoft will innovate with greater speed, and provide enhanced opportunities for consumers and our partners to share in the success of our ecosystem."

The pact, signed ahead of schedule, outlines the financial and technical details of the partnership. The two companies said they have made progress on the development of the first Nokia products incorporating Windows Phone -- Nokia even posted photos hinting at what's to come -- and plan to ship the devices (in volume) by 2012.

Under the terms of the agreement, Nokia will provide mapping, navigation, and some location-based services for Windows Phone. Microsoft will provide open and free access to its Windows Phone platform to enable developers with both companies to collaborate and create new local and global applications. The two companies also will launch a Nokia app store that leverages the Windows Marketplace infrastructure.

The financial terms are somewhat vague. Nokia will pay Microsoft royalties for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship. In exchange, in recognition of the "unique nature of Nokia's agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars" as well as "substantial payments" that reflect the value of Nokia's intellectual property.

Nokia CEO Stephen Elop -- a former Microsoft executive -- said that he wants the first Nokia device with Windows Phone on the market this year, but that the company will continue to make Symbian phones for some time to come. The partnership also will allow Nokia to use certain Microsoft technology, such as the Bing search engine, on non-Windows Phones.

"At the highest level, we have entered into a win-win partnership," said Elop. "It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship."

Though Nokia has struggled to maintain its market lead, it still remains the leading smartphone vendor in the world, shipping more than 100 million devices last year. The announcement with Microsoft comes on the heels of news that Nokia's earnings were better than initially expected.