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Troubled Nokia brings in Microsoft executive to replace CEO

business Updated: Sep 10, 2010 23:43 IST

Reuters
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Nokia, the world's top cellphone maker, brought in Microsoft's Stephen Elop to replace its embattled chief executive and lead a renewed effort to compete in the smartphone market.

Elop, the head of Microsoft's business division, will take over from Olli-Pekka Kallasvuo on September 21.

Shares in Nokia were up 5.8 per cent and 8.175 euros in early trade.

"It is good that something is happening," said Inge Heydorn, fund manager at Sentat Asset Management.

"They have had problems for a long time and have been behind the curve on trends for the past few years. I think it could be good to get new influences and ideas."

Under Kallasvuo, Nokia has struggled to keep up with new rivals such as Apple and Google in the smartphone market. "Elop faces a daunting task. Nokia has lost its leadership in high tier phones and has struggled with the rise of Internet-led services. All eyes will be on what strategy he adopts to address this," said Ben Wood, head of research, CCS Insight.

Microsoft and Nokia are long-time collaborators, and in August last year formed an alliance to bring Office applications such as Outlook e-mail to Nokia devices.

The Finnish company has lacked a hit smartphone model since its 2006 launch of the N95, and has lost out in the top end of the market to Apple's iPhone.

"Nokia has a communication problem. There is no doubt that Stephen Elop is a better communicator than Kallasvuo," said John Strand, head of telecoms consultancy Strand Consult.

Elop, who joined Microsoft in 2008, was credited with successfully managing the launch of Microsoft's Office 2010 suite of applications earlier this year.

Elop helped steer the company toward online versions of programmes such as Word, Outlook and Excel, which users could access from anywhere and even use on mobile devices, a relatively major advance for Microsoft, whose fortune has been founded on installed software.

"His strong software background and proven record in change management will be valuable assets as we press harder to complete the firm's transformation," Chairman Jorma Ollila said. Nokia said Kallasvuo would get a severance payment of 4.6 million euros ($5.84 million).