Why Is Nokia Making This Investment?

After Nokia (NYSE:NOK) reported its seventh straight drop in quarterly revenue last week, the struggling Finnish cellphone manufacturer decided to push forward with its mobile investment strategy.

The struggling Finnish cellphone maker announced Tuesday that it plans to invest $250 million in its venture-capital division, with the intention of funding mobile communication companies in the United States, Europe, and Asia in order to access new technologies that can improve its phones. In particular, Nokia Growth Partners, as the division is known, will use the capital to focus on China, the world’s largest smartphone market by volume.

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Nokia banked its future profitability on its line of Lumia smartphones, which run on Microsoft’s (NYSE:MSFT) Windows Phone 8. The device sold 4.4 million units worldwide in the last quarter, and the company secured a deal with China Mobile (NYSE:CHL) back in December, making Nokia’s smartphones available to the wireless provider’s 700 million customers. However, with the tough competition from Apple’s (NASDAQ:AAPL) iPhone and smartphones powered by Google’s (NASDAQ:GOOG) Android, Nokia is looking to spur demand for the Lumia in markets across the world…