Former Nokia Chairman: Elop was not first choice for CEO

Former Nokia (NYSE:NOK) CEO and Chairman Jorma Ollila said that he made mistakes during his tenure as the company slipped behind faster rivals in the smartphone market. However, he also said that Stephen Elop was not his first choice to become Nokia's CEO in late 2010 and that the work Nokia has done under Elop has not been enough to turn around the company's mobile phone business.

former nokia CEO and Chairman Jorma Ollila


Ollila made the admissions in an interview with Helsingin Sanomat and in his new autobiography, published only in Finnish and titled "Mahdoton Menestys," or "An Impossible Success." The interview coincided with the release of the book. Ollila resigned as CEO of Nokia in late May 2006 and stayed on as chairman, somewhat reluctantly he says, until May 2012.

Ollila led the search to replace Olli-Pekka Kallasvuo as CEO, and he flew to the U.S. in 2010 to interview five potential candidates over the course of three days, according to the book. After the interviews, Ollila's first choice "was the No. 2 man at a well-known American technology company."

Ollila doesn't name the executive but writes the candidate was in his 50s and withdrew himself from consideration for personal reasons. The company then turned to Elop, an executive at Microsoft, who impressed them as "a good salesman and a decisive corporate executive," Ollila writes. A Nokia spokeswoman declined to comment on behalf of Elop, according to the Wall Street Journal.

Microsoft has now agreed to buy Nokia's devices and services business for $7.2 billion. Elop has stepped down as CEO (a position being held in the interim by Chairman Risto Siilasmaa), is serving as executive vice president of devices and services, and he will return to Microsoft when the deal closes early next year. The turn of events has stoked resentment, anger and sadness in Finland, especially after revelations that Elop would be paid a $25.4 million bonus.

Ollila told the Helsingin Sanomat that alarm bells started going off after Apple (NASDAQ:AAPL) unveiled its iPhone in 2007, and the company knew it had to upgrade its aging Symbian operating system. Ollila said Nokia promoted trust as a key corporate value and that the board received assurances from Nokia's management team in 2008 and 2009 that Symbian could be upgraded and made competitive.

"On the board we had to trust that the messages coming from the organization were accurate. After all, they had been accurate before," he said. "But suddenly the old confidence in the organization was no longer there. The products started coming in behind schedule."

Nokia had tried to use the MeeGo platform as an escape route, but ultimately decided to shift to Windows Phone, which Ollila admits has not helped the company as much as had been hoped. "This is true," he said. "We were not successful in using Microsoft's operating system to create competitive products, or an alternative to the two dominant companies in the field."

According to research firm Gartner, in the second quarter Nokia was not among the top five global smartphone makers and its overall global handset share had fallen to 14 percent, from 19.9 percent in the year-ago period. Elop has presided over weak finances and more than 24,000 job cuts.

Microsoft's Windows Phone platform seems positioned to be the strongest platform to challenge Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS, but its global market share is still in the low single-digits--Microsoft captured 3.3 percent of the global smartphone market in the second quarter, according to Gartner; that was up from 2.6 percent in the year-ago quarter. However, Windows Phone posted its highest market share to date of 9.2 percent across the five major European markets of the UK, Germany, France, Italy and Spain, and is now within one percentage point of iOS in Germany, according to a recent data from Kantar Worldpanel ComTech. Windows Phone has hit double-digit sales share figures in France and the UK with 10.8 percent and 12 percent, respectively.

Ollila admits that he made mistakes but said he is not overly concerned with the past. "In this line of work you cannot prevail if you start moping over mistakes of the past," he said. "One reason why I have survived and remained healthy is not lamenting the past."

He said that he understands the "emotion-based" reactions of Finns to the sale of Nokia's handset business. "It is impossible to say what would have happened to the company if different decisions had been made in early 2011 or at some other time," he said. "The past cannot be reconstructed into the present."

Finland's minister of foreign trade, Alexander Stubb, said the sale would spur growth in Finland's technology sector. "This will spur lots of good technology start-ups in Finland. There are a lot of excited engineers who were doing good work," he told the publication Business Standard.

Meanwhile, Nokia is toying with its own smart watch concepts, according to a patent application submitted in August  2012, which details a "multi-segment wearable accessory." According to the description and related diagrams, Nokia has a plan for a modular watch in which different segments of the watch would have its own display, allowing the user to turn his or her wrist to access different pieces of content, according to The Verge.

For more:
- see this Helsingin Sanomat article
- see this WSJ article (sub. req.)
- see this AP article
- see this The Verge article
- see this Business Standard article
- see this separate The Verge article

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