Nokia has been losing ground in the smart-phone sales wars.

Stephen Elop (left) replacing Olli-Pekka Kallasvuo (right)

• Finnish politician charged for Facebook threats against minister

The world's largest mobile phone maker Nokia on Friday named a new software-oriented chief executive, Microsoft's Stephen Elop, to help it battle slumping profits and an eroding market share in the smartphone market.

The Finnish telecommunications equipment giant chose Elop to replace Olli-Pekka Kallasvuo, who had been sharply criticised for failing to bring Nokia up to speed in a changing mobile phone market.

Nokia, once the undisputed ruler of the mobile phone market, has had its considerable lead in the smartphone market pecked away by Apple's iPhone, RIM's Blackberry and Google's Android operating platform.

When the company posted a 40-percent operating profit slump in the second quarter of 2010 speculation was rife that Kallasvuo, a 30-year-Nokia veteran, would be ousted.

Kallasvuo would also resign his position on the Nokia Board of Directors but would continue to chair the Board of Nokia Siemens Networks in a non-executive capacity, the company said.

"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," former CEO and Board Chairman Jorma Ollila said in a statement.

The news sent Nokia shares up 4.91 percent to 8.12 euros on the Helsinki Stock Exchange, which was 1.39 percent stronger shortly before 1000 GMT.

Senior equities analyst for Pohjola Bank Hannu Rauhala said Nokia had been surprised by how quickly the market changed and had been playing catch-up ever since.

"Apple came on the market with a completely new way to use mobiles, and Google Android came quickly behind.

"The speed in which this happened was astonishing," said Rauhala, adding that Nokia's only real answer was the N8 series, which will hit shop shelves later this month.

Nokia is also developing an operating platform with Intel that is intended to challenge Google's Android, Rauhala noted.

Elop, who is currently the President of Microsoft's Business Division, will take over as Nokia CEO on September 21.

"I am extremely excited to become part of a team dedicated to strengthening Nokia's position as the undisputed leader of the mobile communications industry," Elop said in the Nokia statement.

Rauhala said the appointment of a Microsoft executive was an acknowledgement by Nokia that its leadership should change to reflect the drastic change in the entire entire mobile phone industry over the past ten years.

"It's now more about services and operating systems," he said.

Nokia is "looking for a more software-oriented leader," he added.

Elop joined Microsoft in January 2008, making the move from network infrastructure company Juniper Networks, where he was the chief operating officer.

Kallasvuo has been with Nokia for just over 30 years, taking over as CEO in 2006 when Jorma Ollila stepped down. He has served on the board of directors since 2007.

"The whole Board of Directors joins me in thanking Olli-Pekka for his thirty years at Nokia, during which he has been deeply involved in developing the company and its operations," Ollila said in a company statement.

 

• SIGN UP FOR FREE NEWSLETTER     • ALL BREAKING NEWS ON TWITTER