Nokia replaces Kallasvuo with Microsoft’s Elop

Powered by article titled “Nokia replaces Kallasvuo with Microsoft’s Elop” was written by Graeme Wearden, for on Friday 10th September 2010 07.58 UTC

Nokia has fired its embattled chief executive, Olli-Pekka Kallasvuo, and turned to a senior Microsoft executive in an attempt to restore its fortunes.

The mobile phone maker announced this morning that Kallasvuo will leave the company on 20 September. He will be replaced by Stephen Elop, who until last night was the head of Microsoft’s business division.

Shares in Nokia jumped by 5.8% in early trading after the news was announced.

Kallasvuo has been under mounting pressure for months over Nokia’s failure to compete better with Apple’s iPhone and the slew of new handsets running Google’s Android operating system. Nokia’s board said it had appointed Elop in an effort to “complete the transformation” of the company.

“The time is right to accelerate the company’s renewal; to bring in new executive leadership with different skills and strengths in order to drive company success. The Nokia Board believes that Stephen has the right industry experience and leadership skills to realise the full potential of Nokia,” it said this morning.

As president of Microsoft Business Division, Elop was responsible for its Office suite, various applications for enterprise customers, and its unified communications arm. He joined Microsoft at the start of 2008, having previously worked as chief operating officer for Juniper Networks, and headed up Adobe’s sales division.

The announcement of Kallasvuo’s departure comes just days before Nokia World, the company’s annual gathering, which is taking place in London next week.

Analysts at CCS Insight said that Elop’s appointment was a departure from Nokia’s tradition of appointing a Finn as its chief executive.

Nokia has also been criticised for a clumsy acquisitions strategy in which several start-ups were purchased, only to then wither on its books. As the Guardian reported this morning, travel social network site Dopplr appears to have languished since being bought by the Finnish company for m (£12.9m) almost a year ago. Dopplr’s fate has been mirrored by several other promising new companies, which have effectively disappeared from view after being acquired. Meanwhile, Nokia’s Ovi app store has failed to match the success of Apple’s app store, or the Android Marketplace.

In July, analysts at Gartner warned that Nokia needed to find a “European Steve Jobs” to replace Kallasvuo, with “the experience to run a company the size of Nokia, the charisma to pacify investors, the knowledge to recognise bad products and strategies, and the courage to kill them”.

Today, Gartner was reserving judgment about Elop’s appointment.

“Microsoft has many of the same problems as Nokia in terms of innovation, especially in the smartphone business. Steve Elop is an American – which the investors will like – but I’m not sure he brings any specific skills that will fix Nokia’s challenges,” said Gartner vice president and analyst Nick Jones.

Tony Cripps, principal analyst at Ovum, said the choice of Elop showed that Nokia hopes to improve its performance around software, the internet and developer ecosystems.

“Elop’s history with Microsoft and Macromedia/Adobe – in particular – should prepare him well for this challenge, although it will also be incumbent on him to keep growing Nokia’s core handset business, a market he is as yet largely unfamiliar with,” said Cripps.

“Balancing this requirement with the need to move Nokia forward in new areas may prove a difficult challenge to manage effectively.”

Kallasvuo will walk away with a payoff worth €4.6m (£3.8m), to cover 18 months’ salary and a bonus. He will also receive an estimated €820,000 to compensate him for shares which were due to vest next month. © Guardian News & Media Limited 2010

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  2 comments for “Nokia replaces Kallasvuo with Microsoft’s Elop

  1. I see companies all of the time block innovations because they can’t get their heads around the benefit of a new way of doing something— the status quo police are out to get you. See this posting in Forbes magazine

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