The startup, Jolla Ltd, will use MeeGo software, created by Nokia and Intel in 2010-2011, for its products.

Linux-based MeeGo has found use in netbooks and car infotainment systems, but so far has been deployed in just one smartphone model, the Nokia N9.

Finland's Nokia last year swapped its own software platforms, MeeGo and Symbian, for Microsoft's untried Windows Phone - a move that has hit its sales and sent its share price crashing. It has yet to disclose N9 sales figures.

"The Jolla team is formed by directors and core professionals from Nokia's MeeGo N9 organization, together with some of the best minds working on MeeGo in the communities," the startup said in a statement.

Jolla said it would focus on designing, developing and selling new MeeGo-based smartphones and unveil the first model later this year, together with international private investors and partners.

Analysts said the new company would struggle to break into the highly competitive smartphone market, which is dominated by Google and Apple.

"The art is not to create one cool phone, the challenge is to create a sustainable business. And when you have got all that in place you have to bring your product to the market," said John Strand, founder of Danish telecoms consultancy Strand Consult.

(Reporting by Tarmo Virki; Editing by Dale Hudson)

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