Nokia, the world's largest phone maker by volume, is aiming to produce a phone running new partner Microsoft's operating system by the end of the year, its chief executive told Reuters.

Clearly there is significant pressure on the teams and the whole company to ensure that we deliver a great Windows Phone product as quickly as possible, and we would certainly prefer to see that in 2011, CEO Stephen Elop said in an interview on the sidelines of the Mobile World Congress trade show in Barcelona.

Because of the pace of software development and advances of Android, and Windows Phone for that matter, and Apple, we had a risk of falling further and further behind because development of our Symbian-based products was slipping, Elop said.

Elop announced the software tie-up with Microsoft on Friday, but the mainstay of his much-anticipated strategy revamp got the thumbs down from investors, with shares in the Finnish company dropping to their lowest level since 1998.

He put that down to uncertainty.

What that also creates, in the very short-term, is some ambiguity. Ambiguity about the degree to which we'll reduce operating expenditure ... There's ambiguity about managing the transition in the immediate months ahead ... So it's incumbent upon us now, having delivered a great strategy, to demonstrate execution.

He said Nokia would be contributing to the shared Windows Phone ecosystem assets in the areas of services, mapping and location-based navigation, but the process would transfer value from Microsoft to Nokia.

That value in some respects is the opportunity to grow revenue ... to grow new sources of revenue, like advertising ... What I'm trying to convey is that there's substantial money flowing in our direction, and that's measured in the billions.

Elop declined to comment on the ongoing process of selling a stake in Nokia Siemens Networks, its telecoms joint venture with Germany's Siemens.

It's a business which very much, strategically, stands on its own, he said.

(Reporting by Tarmo Virki; Editing by Will Waterman)

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