Microsoft deal with Nokia

Microsoft buys out Nokia's phone business for $7.2 billion .  Nokia CEO Stephen Elop officially rejoins his old company.People are now  assuming that Stephen Elop  is now the heir apparent to the Microsoft CEO job. 

The assumption is probably based on the fact that Elop  purportedly contributed to the destruction in value of Nokia. 

Elop  failed spectacularly as the CEO of Nokia, as  Nokia's smartphone market share plummeted from 37% to less than 5% and the company's stock price lost 85% of its value during Elop's tenure, falling from $10 to a low of $1.63.First, Wall Street is unlikely to get excited about Elop as the next Microsoft CEO. His performance at Nokia didn't inspire much confidence in anyone. While Nokia was in decline when Elop took over, he hastened its demise by choosing to go almost exclusively with Windows Phone as the company's phone platform, alienating the company's existing user base and  laying off over 20,000 employees because of the company's poor financial results.

Those are the kinds of numbers Wall Street analysts and Microsoft board members are going to look at when they consider Stephen Elop for the Microsoft CEO job. That kind of failure does not typically get rewarded by becoming the CEO of an even larger company.

Two Wall Street analysts -- Ben Thompson and Benedict Evans -- are already questioning whether Microsoft actually bought Nokia because Nokia was threatening to stop making Windows Phones, and not because Microsoft wanted Elop.

Another factor that works against Elop as CEO is that about 10 of Microsoft's 16 separate billion dollar businesses are now enterprise businesses. The company needs an enterprise leader,and Elop has limited enterprise experience, other than a stint as a CIO earlier in his career and a one-year tour at Juniper Networks. He has mostly worked with end user applications at Lotus, Macromedia, and Microsoft, where he primarily oversaw Microsoft Office. Elop technically ran "business" software at Microsoft, but it was not the kind of back-end cloud infrastructure that is destined to dominate Microsoft's future, mostly centered around Azure.

Officially, Microsoft announced that Elop will now run the company's Devices and Studios business unit, which will be beefed up with the addition of 32,000 Nokia employees. The question we should be asking is whether this move indicates that there is another shoe still waiting drop.

Is Microsoft planning to put its healthy, high-margin enterprise businesses at the center of the company and spin off its low-margin consumer businesses into a new venture? Making Elop the CEO of that spin-off (which would likely include phones, tablets, and Xbox) would at least make more sense than Elop as the CEO of the enterprise-heavy Microsoft as we know it today.