Nokia appoints Microsoft executive as new head

Stephen Elop and Jorma Ollila Chairman Jorma Ollila (r) said Stephen Elop had the right leadership skills

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Finland's Nokia has appointed Microsoft business manager Stephen Elop as its new chief executive.

Mr Elop - the first non-Finn to head Nokia - will replace Olli-Pekka Kallasvuo, a lifelong employee who had been chief executive since 2006.

The appointment may mark a sea-change in strategy at the top of the company.

In July, Nokia reported a 40% slump in second quarter profits, as it has struggled to maintain its lead in the booming smartphone market.

Analysis

Rory Cellan-Jones

It's a mark of how serious the crisis facing Nokia has become that the company has dumped its chief executive and gone outside Finland for the first time to replace him.

The problem is not so much about sales or profits - Nokia is still by far the world's biggest phone manufacturer - as its loss of what you might call thought leadership.

The mobile world used to look to Nokia for innovation - now it looks to the likes of Apple, or HTC or Samsung.

A Microsoft executive might seem a strange choice to lead the Finnish firm back to the cutting edge - after all Windows phones have made no headway at all in the smartphone battles.

But Steve Elop has had a varied career across the software and communications industries, including spells at Adobe and Juniper Networks.

One former colleague describes him as "an incredible leader". He will need those skills to convince the sceptics that Nokia phones - and the software that runs on them - can be cool again.

Mr Kallasvuo has been facing increasing pressure to quit this year after Nokia issued two profits warnings and its share price fell by more than 40% between March and June.

Experience

Mr Elop will take up his new position at Nokia on 21 September.

He is leaving his current job as the head of Microsoft's Business Division after only 20 months with the US software giant.

Prior to working at Microsoft, he has also held senior positions at Juniper Networks, Adobe Systems and Macromedia.

Mr Elop said his job was to "take the organisation through a period of disruption".

He said that the technology world was facing a "moment of fundamental disruption" thanks to the advent of the smartphone, social media such as Facebook, and "cloud computing" which uses the internet to increase the capabilities of home computers.

In a statement, Nokia chairman Jorma Ollila said: "The Nokia board believes that Stephen has the right industry experience and leadership skills to realise the full potential of Nokia.

"His strong software background and proven record in change management will be valuable assets as we press harder to complete the transformation of the company."

Cultural sensitivities

Mr Ollila confirmed that the board had been looking at a replacement chief executive since May, and had considered but rejected a number internal candidates.

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"We have had no preconceived views on the often raised big question that people have in their mind - is it an external or an internal person we might be looking at," he said.

He added that the company's new head "does have a very strong cultural sensitivity and a grasp of Nokia's somewhat special heritage, where there is a lot of Finnishness about it."

The departing chief executive, Mr Kallasvuo, will stay on as a non-executive director on the Nokia board. He will receive 18 months' salary - worth 4.6m euros (£3.8m; $5.8m) - in severance pay.

"The whole board of directors joins me in thanking Olli-Pekka for his 30 years at Nokia," Mr Ollila said in a statement.

When asked at the press conference about the decision to let Mr Kallasvuo go, the chairman said it "was not easy", noting that they had been working together for 25 years.

Global Smartphone Sales

Company 2010 second quarter 2009 second quarter Growth rate

Source: Gartner; millions of units (market share %)

Symbian (Nokia)

25.4m (41%)

20.9m (51%)

22%

Research in Motion (Blackberry)

11.2m (18%)

7.8m (19%)

44%

Android (Google)

10.6m (17%)

0.8m (2%)

1,300%

iOS (Apple)

8.7m (14%)

5.3m (13%)

64%

Microsoft

3.1m (5%)

3.8m (9%)

-19%

Linux

1.5m (2%)

1.9m (5%)

-21%

Other

1.1m (2%)

0.5m (1%)

118%

Total market

61.6m (100%)

41.0m (100%)

50%

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