Microsoft and Nokia have called off advanced talks which would have seen the US software giant purchase the Finnish company’s handset business, the Wall Street Journal reported on Tuesday.

The report cited people familiar with the matter as saying the precarious position of Nokia and the high price such a deal would have demanded were the main factors in the failure of the audacious purchase, which could have reshaped the world smartphone industry.

Nokia was the world’s top selling mobile phone maker until smartphones from Apple and various companies that adopted Google’s Android operating system became the dominant sellers.

Nokia tried to rely on its own Symbian operating system before signing an exclusive deal to use Microsoft’s Windows Phone operating system developed belatedly to compete with the leading smartphone brands.

Smartphones and tablets are increasingly denting sales of the personal computers at the core of Microsoft’s business empire, but Microsoft trails far behind Apple and Google-powered phones with just 3.2 per cent of the world smartphone market, according to research firm IDC.

The aborted deal would have seen Microsoft expand its hardware business in the same way that Google has done with the purchase of Motorola Mobility, the company that first pioneered cell-phones.

According to the report the two companies were close to an oral agreement when the talks fell apart. The companies declined to confirm or deny the purported negotiations.

“We have a deep partnership with Microsoft and it is not uncommon for Nokia and Microsoft to meet on a regular basis,” a Nokia spokeswoman told the paper. A Microsoft spokeswoman declined to comment.

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