As expected, Finland-based cell phone maker Nokia Corp. has booted Olli-Pekka Kallasvuo, its leader of four years. But did board members pick the right replacement? A number of analysts think not and, to be sure, new Nokia President and CEO Stephen Elop’s résumé raises questions about his ability to bring a once-dominant company back from the brink.
On Friday, Nokia announced that Kallasvuo had resigned, effective immediately, and that Elop will take over on Sept. 21. Such a change was anticipated. In July, news broke that Nokia was on the hunt to replace Kallasvuo, who, since becoming head of Nokia in 2006, failed to mount a formidable response to the iPhone and BlackBerry, and anything Android-based. Upon learning of Kallasvuo’s pending ouster, analysts said Kallasvuo’s successor needs “Silicon Valley thinking," a software background and experience running a company. And while Elop fits those criteria, he doesn’t flesh them out.
Elop comes to Nokia from Microsoft’s business division, the unit that develops Microsoft Office programs, services and servers. Yes, Elop boasts a software engineering history – and he’s worked as a top exec in Silicon Valley stalwarts Juniper Networks, Adobe Systems and Macromedia – but his apparent lack of knowledge in designing wireless devices looks like one of his vulnerable spots. And even though Elop worked at Microsoft during the Kin handset debacle (the mobile phone that was discontinued almost as soon as it was released), he wasn’t part of that initiative.
Perhaps an even more glaring problem is Elop’s lack of connections with U.S. wireless carriers, a Gartner analyst told MarketWatch. Nokia has yet to make extensive inroads with Sprint Nextel Corp., AT&T Inc. and Verizon Communications Inc. If it could do so, its fortunes surely would shift. But if Nokia is pinning such hopes on Elop, the company has chosen the wrong person.
"Everyone's talking about his U.S. experience like it's a big asset," Carolina Milanesi, research director in Gartner’s mobile devices and consumer services practice, told MarketWatch. “Well, not really when you get someone with no connection to the carriers."
Thus, Elop and Nokia have much to prove. And industry experts are not being shy about their skepticism. It’s imperative that Elop “keep growing Nokia’s core handset business, a market he is as yet largely unfamiliar with," said Tony Cripps, Ovum principal analyst. “Balancing this requirement with the need to move Nokia forward in new areas may prove a difficult challenge to manage effectively."
Nokia remains the world’s largest cell phone maker, but soon could lose that grip as Apple, most of all, dominates the consumer handset market. Through it all, Kallasvuo became an impotent leader, seemingly unable to do more than restructure Nokia – twice in seven months – and revise earnings forecasts, downward.
