Microsoft applications chief defects to Nokia

The surprise announcement last week that Microsoft Business Division president Stephen Elop was leaving the company to join Nokia was just the sort of bad news that Microsoft doesn’t need at the moment.

Microsoft CEO Steve Ballmer put on a brave face in an email to employees, wishing Elop well and congratulating him for leaving behind a strong business and technical leadership team.

For the 2010 financial year, Microsoft Business Division revenues fell 1% against 2009; profits were up 1% for the year, but 2% lower than 2008’s results. While Microsoft Office accounts for the lion’s share of the Business Division’s turnover, revenues from Dynamics ERP and business application families such as NAV (Navision), GP (Great Plains) and CRM are so insignificant they do not merit separate lines in the company’s annual accounts filings. And the decision to axe Microsoft PerformancePoint Server and fold its business analysis tools into the Office product group damaged the company’s credibility as a supplier of financial management applications.

For Elop, the decision to jump from one ailing technology giant to another is a surprising career move.

Once the undisputed king of the mobile phone handset market, Nokia has seen its handset-based business model disrupted by Apple’s iPhone and devices based on Google’s Android phone operating system. Nokia is still struggling to catch up, and has struggled to establish its Symbian operating system software in the market for more expensive and capable devices with much higher profit margins.

While some analysts characterised the tie-up as a death embrace of two technology has-beens, the companies last year set up a joint partnership in which Nokia is adapting enterprise apps such as the Microsoft Office Communicator for its Symbian operating system. There is also talk of the possibility that Nokia might take on Microsoft’s Windows Mobile operating system as its primary platform.

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