Olli-Pekka Kallasvuo is leaving Nokia and the company?s board of directors has appointed Stephen Elop president/CEO, who has his work cut out for him.

Mr. Elop currently heads Microsoft's business division and previously held senior executive positions in a number of United States-based public companies, including Juniper Networks, Adobe Systems Inc. and Macromedia Inc. Nokia?s manifold challenges include its smartphone business, which has a relatively uncompetitive platform?Symbian?that is losing out to Apple?s iOS and Google?s Android.

?The key issue here is user experience,? said Nick Jones, Egham, Britain-based vice president and distinguished analyst at Gartner. ?Apple and RIM have shown that owning your own platform can be valuable, but it must be a platform people want to use, so one thing Steve must do is fix the platform strategy.?

Related to that challenge is Nokia?s declining handset market share in the United States and worldwide and a lack of firm ties with American carriers, which has lead to the absence of a hit smartphone here.

The N97 was popular in some international markets, but because no American carriers subsidized the handset, it was a non-factor in the U.S.

In addition, there is confusion regarding the various operating systems it employs?Java, MeeGo and Symbian.

?In terms of the U.S. market, one thing Nokia needs is a competitive CDMA handset portfolio so they can sell to Verizon,? Mr. Jones said. ?Services such as advertising are not relevant if your handsets don?t run on the [carrier] networks.?

Mobile content and advertising are critical
Nokia is also faced with a failing mobile content strategy, with its Comes With Music initiative off to a slow start and its Ovi storefront lagging behind Apple?s App Store and Google?s Android Market in terms of content and applications.

?Nokia correctly identified the importance of services, but so far hasn?t managed to get the Ovi ecosystem working,? Mr. Jones said. ?Ovi has a lot fewer apps than Apple or Android, fewer developers, and Nokia users don?t seem addicted to downloading apps in the way Apple users are.

?So the ecosystem needs work,? he said.

Nokia subsidiary Navteq is doing some interesting things in location-based mobile advertising with its LocationPoint Advertising platform (see story).

However, with Apple?s iAd, Google/AdMob, Microsoft Advertising and a host of successful independent mobile ad networks, Nokia is facing a highly competitive mobile advertising space.

Perfect fit?
Microsoft, Mr. Elop?s former company, has many of the same problems as Nokia in terms of innovation, especially in the smartphone business, according to Gartner.

Mr. Elop is a Canadian with a lot of U.S. corporate experience, which the investors will probably like, but Mr. Jones said that he is not sure whether or not he brings any specific skills that will overcome Nokia?s challenges.

However, given that Yahoo and Microsoft have partnered on mobile search, and Yahoo has partnered with Nokia, maybe the three companies can band together to compete with Apple and Google.

?My personal view is that Nokia?s board made a safe choice when they should have made a courageous choice,? Mr. Jones said. ?Although, having an ex-Microsoft person running Nokia suggests lots of interesting possibilities for the future?Nokia plus Microsoft allying to fight Google and Apple.

?Another challenge is investor perception,? he said. ?Under [Mr. Kallasvuo?s] management investors did not think that Nokia had the right CEO to fix its problems, so a change in CEO may be perceived as a good thing here.?

Nokia?s mandate
So where should the new CEO take Nokia to revitalize its various business units?

Where should Mr. Elop place the greatest emphasis during his first 100 days at the helm?

Since Nokia is first and foremost a handset manufacturer, that is where it must focus its efforts initially.

The company must decide whether juggling Java, MeeGo and Symbian will enable it to compete with the other major players.

?The first thing I would take a look at is what their product roadmap is in terms of handsets they?re putting out on the market,? said Patrick Mork, chief marketing officer of GetJar, San Mateo, CA. ?They are a huge global player and a strong brand, but there is a consensus that they are not as cutting-edge with handsets as they used to be.

?They?re playing catch-up with the market rather than innovating,? he said. ?They also have to evaluate how effective their platform strategy is in terms of the platforms Nokia is working with for its handsets.

?Using Java, MeeGo and Symbian has caused confusion in the market, so what exactly is their strategy? Are those platforms good enough for Nokia to compete effectively??

Mr. Mork said that the second area Nokia must address is its strategy around mobile media and content.

Mr. Kallusvuo tried to make Nokia a multimedia company, and the company has been pushing into a number of different areas, from mapping and advertising to applications and gaming.

?There are a lot of challenges there and the results have been mixed, so they have to ask if they?re better off working with third parties rather than trying to do all this stuff internally,? Mr. Mork said.

New day for Nokia?
Other analysts believe that Nokia?s demise has been greatly exaggerated.

After all, in 2009 Nokia's net sales were EUR 41 billion (more than $52 billion USD) and it had an operating profit of EUR 1.2 billion (more than $1.5 billion USD).

?You have to bear in mind here that Nokia is not in the threatened position that people make it out to be,? said Chris Lewis, group vice president of international telecom at IDC, London. ?It has been a market leader for many years, and it is still a very strong player.

?The media tends to focus on Apple, Android and RIM, but Nokia is still a phenomenally strong player,? he said. ?However, the U.S. piece is an area that needs to be improved upon, because it doesn?t have the relationships with U.S. carriers.

?The fact remains that Nokia makes great phones, and its expansion into other mobile devices is absolutely where their strategy lies.?

Mr. Lewis agrees with Mr. Mork that Nokia needs to sort out its multi-OS situation, and it needs to work more closely with partners in other parts of the mobile industry.

For its Ovi application storefront, Nokia needs to build relationships with the application development community and make it as easy as possible for developers to work with the company.

?If the devices are good enough, then it will attract applications, and consumers will want to download them,? Mr. Lewis said. ?Mr. Elop?s mandate is stressing the fact that they are still a leading player so that gets recognized and communicate the direction they?re going.

?Nokia needs to step up in terms of the user interface?there are new releases of Symbian coming up, which must be equally user friendly as Apple and Android devices are,? he said. ?In addition, [location-based services] and mobile advertising are all key parts of the future of the mobile industry, and they have key assets there, but mobile advertising has got to be presented to a way that is easily usable and easily understood by the industry.

?The question remains: How much does Nokia do and how much do its partners do??

Final Take
Dan Butcher, associate editor, Mobile Marketer