John Paczkowski

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Nokia’s CEO Switch: Right Move, Wrong Time?

Stephen ElopNokia replaced its chief executive, Olli-Pekka Kallasvuo (OPK), this morning with Stephen Elop, the head of Microsoft’s business unit, in a bid to “accelerate the company’s renewal” after an ugly 70 percent decline in market value over the past few years.

The move was a long time coming. Question is, did it come at the right time? And while it’s obviously far too early to say definitively, it’s clear that it comes at an awkward one. Arguably, the only “right time” for a shift like this was years ago–before Nokia (NOK) was caught off guard by Apple’s (AAPL) iPhone and the new breed of smartphone it heralded.

That said, making the change on the eve of Nokia World, the company’s annual showcase event, seems an unfortunate choice, as does making it ahead of a major refresh of the company’s smartphone portfolio.

While Elop’s appointment will certainly put an end to speculation about OPK’s tenure at the company, it’s also going to put Nokia’s executive shake-up top of mind at a time when attention is best focused on new products. Worse, it puts the company in the precarious position of swapping out CEOs ahead of a major product launch, the N8–Nokia’s new marquee smartphone, its first to use the Symbian 3 operating system and the device with which the company has said it will reclaim its lost glory.

In other words, Elop is not starting off with a clean slate, but a full one, overflowing with a new software platform and a new smartphone portfolio. He’s not going to be recasting Nokia’s smartphone strategy–he’s going to be executing the one established by his ousted predecessor. And he’s going to be doing it with little hardware design and wireless carrier experience, two things crucial to that strategy’s success.

That seems a daunting challenge. That said, Elop did run Microsoft’s (MSFT) $19 billion Business Division, so perhaps his operational chops make up for those deficits.

The timing of the move may be debatable, but the need for it was not.

By the way, here is the email that Microsoft CEO Steve Ballmer sent out to employees about Elop’s departure:

Microsoft Business Division Transition

Sept. 9, 2010

I am writing to let you know that Stephen Elop has been offered and has accepted the job as CEO of Nokia and will be leaving Microsoft, effective immediately. Stephen leaves in place a strong business and technical leadership team, including Chris Capossela, Kurt DelBene, Amy Hood and Kirill Tatarinov, all of whom will report to me for the interim.

The MBD business continues to grow and thrive, with 15 percent growth in the last quarter. It has been good to see the great response to Office 2010 and SharePoint 2010, the growth of our Dynamics business and the way we have been successful in extending all our MBD products and services to the cloud. I appreciate the way that Stephen has been a good steward of the brand and business in his time here, and look forward to continuing to work with him in his new role at Nokia.

Please join me in wishing Stephen well.