Nokia was hoping the Linux-based software platform, code-named Meltemi, would replace its ageing Series 40 software in more advanced feature phones, but has killed the project as part of its massive cost-cutting drive.
Scrapping the platform means loss-making Nokia will risk losing its strong position in the mass-market -- where phones are priced at $100-$200. Nokia controlled more than 20 percent of this market in the first quarter, according to research firm IDC.
Nokia's Chief Executive Stephen Elop flagged Meltemi in a leaked video in mid-2011, but Nokia has never officially confirmed Meltemi existed. It declined to comment on Thursday.
In June, Nokia said it would cut 10,000 jobs - one in five staff in its phone business - as it aims to pull the company out of the red. Talks over job cuts are scheduled to end this week in Finland.
One of the sources, who works at a supplier, said the original plan was for the first feature phones using Meltemi should to be on the market by now.
Smartphones such as Apple's iPhone which offer a platform for third-party application developers, is where the industry's strongest growth is. But simpler feature phones, with limited support for third-party software, still account for most units sold.
Nokia's Series 40 platform are in around 2 billion cellphones, making it the most ubiquitous software in the market. But it lacks the smartphone-like experience Meltemi could have offered.
Google's Android platform has stormed the smartphone market in its first few years. Last quarter it was used in roughly 60 percent of all smartphones sold.
Nokia last year dumped its own smartphone software platforms in favour of Microsoft's Windows Phone, which has so far had a limited impact, in part due to the high prices of phones using it.
Copyright Thomson Reuters 2012