Did Microsoft Buy Nokia Or CEO Stephen Elop?

The Microsoft purchase of most of Finnish mobile company Nokia has skyrocketed the speculation around the possible choice of Nokia CEO and former Microsoft executive Stephen Elop as the successor to current CEO Steve Ballmer.

Ever since Ballmer announced his plans to retire in the next 12 months just over a week ago, rumors began circulating about who would be named as his successor. While there has been no announcement yet on who will be chosen to lead the tech giant, Ballmer has officially said that Elop is one of the candidates for the job.

"Stephen will go from external [candidate] to internal," Ballmer said in an interview with The Seattle Times. The new CEO will be chosen by Microsoft's board of directors, which has already set a search process in place.

[Related: The Next Microsoft CEO? 10 Potential Candidates To Replace Ballmer ]

However, analysts are asking why Microsoft even bothered to purchase Nokia, with whom Microsoft already had an extremely close relationship. Nokia runs Windows OS on all of its phones and is the only major producer of phones with the software.

"[Microsoft and Nokia] already had a strong relationship, so why did they have to go spend this kind of money? To get Elop," said Jack Gold, a technology industry analyst with J. Gold Associates.

Gold said it would "almost signal the doom of Nokia" if Microsoft stole Elop away from the mobile phone company, where he has been since 2010. However, his return to Microsoft may signal a greater intention behind the merger, beyond breaking Microsoft into the mobile device market.

"I think this is much about getting Elop on board as it is getting a devices company," Gold said.

Bringing Elop back into the company would allow for an easier and more seamless ascension to CEO, analysts said.

"Elop's name has come up quite a bit as one of the favorites [to succeed Ballmer]. His chances of becoming the next CEO are greatly improved now that he is going back to the 'mothership,' so to speak," Gartner Research Vice President Carolina Milanesi said.

NEXT: Don't Put All Your Money On Elop Just Yet

Elop became president of Microsoft's Business Division in 2008, coming from a COO position at Juniper Networks. His new position back at Microsoft will place him as head of an expanded Devices team, putting him in charge of another potential candidate, Julie Larson-Green, executive vice president of Microsoft's Devices and Services group, according to a memo circulated among Microsoft employees. Elop will report directly to CEO Ballmer.

"This puts Elop in a much better position. I think Steve Ballmer would like Elop," said Jeff Kagan, an independent technology analyst.

Since joining Nokia in 2010 as CEO, Elop, or "Stephen Eflop" as some called him, struggled to revive the failing mobile company through layoffs and cuts to R&D, and purchased Siemens AG for $2.2 billion. While he managed to lessen some of the losses under his leadership, Elop watched as Nokia mobile phones fell to only 3 percent of market share.

However, given Microsoft's position with services across many different platforms, Jack Narcotta, analyst at Technology Business Research, said that it is unlikely that the board will choose him as CEO. Narcotta said that Elop has certainly established himself as a viable candidate, but he doubts that he is a shoe-in for the position.

"It certainly seems like a good fit," Narcotta said. "[However], it's fundamentally a different company than when he left and that does present a whole other set of challenges."

Instead, Narcotta said that he thinks that Microsoft is getting all of its ducks aligned for a stable future before moving forward on its short list of candidates for the job.

"Ultimately, I think what's important now, when a company is undergoing a fundamental transition, at this point, at least outlining the plan gives comfort while the road ahead is still a little rocky," Narcotta said. "Now, ultimately, who is going to lead the charge of the whole company [is still uncertain], but ultimately what gives the customers some comfort is that there is a plan set for the future."

PUBLISHED SEPT. 3, 2013