Wireless Linux group LiMo hopes to benefit from a tie-up between Microsoft and Nokia as this should push smaller phone makers to seek alternative software platforms, its head said on Monday.

Computer operating system Linux has started to win traction in mobile with Google Inc's Android rising to the No. 1 spot in global smartphone rankings last quarter, helped by a wide array of models from many vendors.

With Microsoft and Nokia now in lockstep and the Android arena rapidly becoming commoditized, other handset vendors must look elsewhere to avoid the irreversible margin collapse that befell PC manufacturers, Morgan Gillis, head of LiMo, told Reuters.

LiMo, a non-profit foundation, hopes to benefit from its focus on giving greater say over software development to telecoms operators, but it has struggled to win wider adoption outside Japan.

The market for software platforms on cellphones was led by Nokia's Symbian operating system for a decade, but its position has weakened since Apple Inc's 2007 introduction of iPhone, culminating to last week's announcement on adopting Microsoft's Windows Phone as its primary platform.

The new tie-up has great upside for Microsoft although there is also a major risk that the existing Windows Phone vendors will now feel alienated, Gillis said.

It's clearly a huge gamble for Nokia but they were caught between a rock and a hard place.

Linux is the most popular type of free or so-called open source computer operating system which is available to the public to be used, revised and shared.

Linux suppliers earn money selling improvements and technical services, and Linux competes directly with Microsoft, which charges for its Windows software and opposes freely sharing its code.

On Monday, LiMo unveiled a new version of its platform, which it expects to reach market in phones sold in the second half of 2011.

(Editing by Bernard Orr)