By Michael Cohn

Nokia and Yahoo teamed up Wednesday to bundle Yahoo’s email and instant messaging services on the latest models from the Finnish phone maker.

Starting early next year, Nokia will include Yahoo Mail and Yahoo Messenger on the phones it begins shipping in its Series 40 line. The first phones to feature the services will be the 6300, 5300 XpressMusic, and 5200 models that Nokia introduced at its annual Capital Market Days event Tuesday in Amsterdam.

The Finnish phone maker will then broaden the number of Series 40 phones with the Yahoo services over the course of next year.

While many Nokia cell phones can already access Yahoo services through various wireless carriers’ mobile menus, the integration with Nokia’s software will streamline the process of sending and receive email and instant messages via Yahoo.

“This actually builds Yahoo services basically into the operating system of the Nokia devices,” said Yahoo spokesperson Nicole Leverich. “On pretty much any phone today, for example with Cingular’s MEdia Net, a consumer can get on Yahoo, but this builds in the functionality.”

Users who are about to send a message can just click to send it via Yahoo Messenger or Yahoo Mail with the software integration. They can include emoticons in their IM messages, let friends and family members know when they are available to chat, and find out when their buddies are online.

Shares of Nokia rose $0.18 to $20.27 in recent trading, while Yahoo shares fell $0.16 to $26.84.

Raising Consumer Awareness

The service is free, but Ms. Leverich pointed out that the carriers typically charge customers for the amount of data they send. However, the Yahoo software won’t be sold as a premium service.

Yahoo doesn’t plan to monetize the service through ads or revenue sharing either, she noted. “This is really about reach,” said Ms. Leverich. “This is about getting the services in the hands of customers and helping drive consumer adoption of data services.”

Yahoo has been competing with rivals like Google to offer mobile services such as email, search, and video (see Gmail, YouTube Going Mobile). The Nokia integration will help the company compete better, especially in Europe.

The two companies have been working together since April 2005 to provide functions such as search on mobile devices. The latest deal represents an expansion of their partnership.