Commentary

Nokia Turns To Microsoft For A New Leader

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On the same day Nokia named Microsoft executive Stephen Elop as its new CEO, Gartner released a report predicting that in four years Android will nearly match the leading market share of Symbian -- the mobile operating system that runs on most Nokia phones. 

The Gartner forecast roughly parallels a forecast from IDC earlier this week highlighting Android's rise at Symbian's expense, underscoring the challenge Elop faces in reviving Nokia's role as a major player in the smartphone market.

One of the key reasons the Finnish phone giant is replacing Olli-Pekka Kallasvuo as CEO is because he failed to come up with a credible rival to the iPhone over the last four years.

But turning to Elop, head of Microsoft's business division, to solve that problem seems a curious choice. After all, Microsoft has had its own woes coping with the surge of Apple's iPhone and phones based on Google's Android system in the last few years.

But the rationale is that Elop's strong background in software, with stints also at Macromedia, Adobe and Juniper Networks, make him well suited to overseeing Nokia's shift from a hardware to more of a software company. Nokia also touts his experience in change management and knowledge of the U.S. market.

The strategic partnership Microsoft has forged with Nokia over the last two years has also given Elop "substantial exposure to the inner workings of Nokia," according to a company blog post, which will help him the hit the ground running. If that's true, all the better for Elop as he starts the new job. But his background looks more focused on this enterprise than on the consumer software market, which is where most of the growth is coming from in smartphones -- just ask Research in Motion.

Even so, Elop's familiarity with the U.S. market could prove valuable in helping Nokia make strides towards its goal of regaining smartphone share here. One of the biggest barriers for Nokia in the U.S. has been the lack of high-end phones it offers that are subsidized by carrier partners. Google's experiment with the Nexus One only underscored that Americans aren't eager to buy unlocked phones at full price. If Nokia wants to compete with the likes of Apple, Motorola and HTC in the U.S., Elop will have to forge closer ties to the major U.S. carriers to sell subsidized Nokia devices.

But the company doesn't appear to be changing course with its latest iPhone challenger, the N8, which is available for pre-order via the Nokia USA site for $549, unlocked and no-contract. Nokia may consider that a competitive price for its new flagship smartphone, but compared to the $199 subsidized price of the iPhone 4, it doesn't look so appealing to American mobile customers.

Whether Elop can change the thinking at Nokia on how to sell and market its best phones in the U.S. will be one of the benchmarks of his success in turning around the company's fortunes. For Nokia, which is hiring the first non-Finn to run the company in its 145-year history, just bringing on the Canadian-born Elop is a big step. And any changes brought about by the new CEO probably won't come overnight.

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