Nokia chose to join up with the less than loved giant because the other options were slow death with dated or delayed platforms or to become an OEM for Google competing with agile Asian manufactures and losing out the Services battle rendering investments like Navteq practically worthless. Nokia chose the option, where it has most influence on its future. This alliance enables:
New, modern OS with better usability (which has been the problem with Symbian). Even though it's early days for WM7, the initial feedback has been good and much better than S^3 reviews
MS has an army of coders developing the OS, which will enables Nokia to save significantly in R&D cots
MS has enormous marketing engine and budget
Even if the first N+MS phone is not perfect, both companies have huge resources to push forward and improve the products over time until the product is mature enough (think Zune player) This is a luxury many companies don't have.
MS enables Nokia a quick, yet expensive access to North American market. Even few per cent market share with MS has more media value than Nokia's individual attempts to win over North America.
Nokia's alliance is not unique. HTC also has WM and Android phones in its portfolio. Nokia has the advantage due to its size and can use it to affect how WM will be developed in the future and how it will be integrated to Nokia services.
Symbian will be around for a long time, but as a S40 version. Nokia has built different versions of emerging markets for a long time and today S40 Touch phones offer nearly the same user experience as the older S60 phones, such as N97. Even if S60 would be totally discontinued, the development of S40 can offer nearly similar phones as current S60 for emerging markets.
Analysts seem to forget the massive potential, which lies dormant in emerging markets. As Elop mentioned, the next billion users are waiting to access internet. Nokia with a strong foothold on those markets can offer that access. These markets have grown up with and customers have aspired to own a Nokia phone and eventually gotten it are an easy target for Nokia to build upon with new services in addition to internet, such as Nokia Money and Life Tools.
Nokia could offer WM7 phones for these markets, but due to hardware requirements, those phones will be too expensive for the masses. S40 will offer similar user experience, but much more cheaply.
On important thing to remember is that Nokia and Microsoft contract is not binding, leaving Nokia with the option to check out anytime and this might be the reason for Meego being left as an alternative platform. Meego will be developed on the side, creating new and exciting products until something so strong comes along that Nokia no longer needs Microsoft. This may never happend, but the exit strategy exists.
Another thing analysts have missed is the embedded Meego. Today Meego and WM are strong contenders for car computing. Navteq has worked years with car manufactures, so there's even more potential. Nokia builds its future on two platforms which have practically untapped market so far.
Meego will become Nokia's 'Skunkworks', where new technologies are tested, competitive advantage is created and exit strategy is being secured.