Sendo's developmental Z100 had long been the chief flag-waver unit for Microsoft's smartphone software but the phone has now been discontinued.
Sendo chief executive Hugh Brogan said Nokia's software was chosen because, unlike Microsoft, Nokia offered Sendo access to its source code, making it easier to customise applications.
Last year, Microsoft took a minority stake in the UK-based phone manufacturer, hoping to tap into the phone manufacturer's ability to customise phones for network operators.
"But this might now prove difficult for Microsoft, given Sendo's reasons for turning its back on the Smartphone platform, even though it had a device ready to ship," analysts at Ovum in London said. "Microsoft's licensing conditions could not accommodate the depth of customisation required by operators."
Sendo will now used Nokia's series-60 software.
Microsoft mobile devices product manager Adam Anger described Sendo's decision as “unfortunate”. Anger said Microsoft remains confident in its software.
"Testimony is that we still get support from operators, three hardware vendors and applications developers," he said.