Former Nokia CEO tipped as possible successor to Steve Ballmer

Stephen Elop, the Canadian CEO of Nokia who moves back to Microsoft under the5.4-billion($7.6-billion Cdn) deal the two companiesstruck today, has become a key contender in the race to lead Microsoft itself.

Last month, Microsoft CEO Steve Ballmer announced he wouldstep down within a year, sparking an internal and external search for the next head of the tech behemoth.

Elop headed up Microsofts business services division before moving to Nokia four years ago and he rejoins Microsoft as executive vice-president for devices and services, an announcement made as part of the deal that sees Microsoftbuying Nokia's lineup of smartphones and a portfolio of patents and services.

'Microsoft is an enormous company, its an international company and its in so many different businesses and its trying to get into so many other different businesses.' Technology analyst Jeff Kagan

Elop, 49,has an edge as a candidate who has secured Microsofts expansion into mobile, first striking a major partnership with Nokia todevelop the Lumia operating system, then bringing that business into the Microsoft fold. He brings with him some teams from Nokia who worked on the Windows Phone-Nokia deal and will manage an expanded unit as a result.

In comments made to the Seattle Times, Ballmer confirmed that Elop is definitely a prospect for the top job, noting that "Stephen will go from external [candidate] to internal" as part of the boards wider search.

Hes not the only internal candidate theres also Terry Myerson, operating systems chief; Julie Larson-Green, in charge of Xbox and the Surface tablet; Eric Rudder, head of research and technology; and COO Kevin Turner.

Atlanta-based technology industry analyst Jeff Kagan agrees Elop is a strong candidate. The Nokia-Microsoft deal achieves two things, he said.

Getting Elop on the team

"One is so they can run the handset business they see that as a big part of their future. But two is to get Stephen Elop on the Microsoft team and to decide whether they want him to replace Steve Ballmer," Kagan said in an interview with CBC News.

Microsoft is a complex company and will be assessing Elop on both his past record and his stickhandling of the wireless business, Kagan said.

"Microsoft is an enormous company, its an international company and its in so many different businesses and its trying to get into so many other different businesses," he said. " The question is does Elop have what it takes to run not just the wireless business, but all of Microsoft."

Kagan says Elops ascendancy is not a foregone conclusion and notes the somewhat limited success of Microsofts foray into wireless with Nokia. He points to companies such as Sprint that take several tries before they find a CEO with the right breadth of vision to drive the company forward.

"Its important that they choose someone who understands all of Microsofts strengths and weaknesses," he said.

Varied background in software, equipment

Elop, raised in Ancaster, Ont., studied computer engineering and management at McMaster University in Hamilton, Ont., and worked at Lotus Development and Boston Chicken before joining U.S. graphics software firm Macromedia, where he rose to become CEO. He also has been COO of network equipment maker Juniper Networks and spent just two years as chief of Microsofts business division before leaving for Nokia in 2010.

Nokia, once a market leader in handsets, at that time was watching its star fall as Apple iPhone and the Google Android mobile operating systems took over the mobile market.

In 2011, Elop warned Nokia employees that the company would have to change, and quickly, to avoid a further fall. "We are standing on a burning platform, and we must decide how we are going to change our behaviour," he wrote.

He was seen as a Trojan Horse, operating on Microsofts behalf, when Nokia chose Window Phone as the platform for its smartphones, but that move has helped halt the Finnish companys slide. Elops credentials thus include the skill of bringing a company back from the edge, as well as a background in devices and software.

Some analysts point to Nokias still lacklustre market share as a strike against Elop. But Ballmer had fulsome praise for the potential of Windows Phone now thatit is being run by Microsoft.

"We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together," he said in an internal memo.

"Our Windows Phone partnership over the past two and half years has yielded incredible workthe stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market."

Microsofts absence in the smartphone market was long seen as a weakness and Ballmer seemed chuffed at both the possibilities for devices and the potential for Windows-based services going forward.

He also may be keen to groom an in-house successor such as Elop. Elop himself, however, has not commented on whether he will seek the position of Microsoft CEO.