The cost cutting axe has fallen on the neck of Nokia's planned mobile software platform Meltemi, according to multiple sources with knowledge of the situation.

The new linux-based software would've competed with Google's Android platform, and replaced Nokia's own Series 40 software, which is still receiving upgrades and new features, but lacks the robust capabilities that modern smartphones (the fastest growing sector of the mobile industry) powered by Android or Apple's iOS do.

While the Series 40 platform is still the most prevalent mobile phone platform in the world, existing in more than 2 billion mobile phones, its market share is rapidly dwindling, and a new, more advanced platform appears to have been Nokia's only hope of building new momentum in the marketplace, and competing with Android and Apple's iOS.

Declining sales and mountains of red ink are the main culprits behind putting the software, which one source said was originally planned to be available in smartphones by this point in time, on ice.

Nokia lost $1 billion in their last financial quarter, and announced they would slash 10,000 jobs as a result. That isn't all they slashed, as their Lumia 900 Windows Phone was slashed in price from $99 to $49 just 3 months after launch, amid sluggish sales.

"With the pressure to make extreme cost-savings it is little surprise that it has been cut," said Canalys analyst Pete Cunningham.

Where this leaves Nokia in the smartphone market is likely at the mercy of Windows Phone software, which they latched on to last year and used in their flagship Lumia 900 smartphone (it of the sluggish sales), but which has failed to make much of an impact on the smartphone market, and continues to be viewed as overpriced.

Was this a necessary move by Nokia to cut costs? Or does abandoning Meltemi end any hope of them making up ground (and there's a lot of ground to be made up) in the smartphone market?