Finland's Nokia (NOK), the world's biggest mobile phone maker, picked insider Olli-Pekka Kallasvuo (search) to take over as chief executive next year from Jorma Ollila (search), who will step back to become part-time chairman.

Kallasvuo, who currently heads Nokia's biggest division, Mobile Phones, will take over as chief executive from June 1.

Ollila, 54, is seen as a corporate hero in his homeland, having overseen the firm's reinvention from a diversified Finnish industrial group producing rubber boots and cables to be the top global cellphone maker.

Nokia said in a statement Ollila, who has headed Nokia since 1992, would continue as chairman and CEO before moving to his part-time, non-executive role, to ensure an orderly transition.

Kallasvuo, 52, joined the company 25 years ago. He held the role of chief financial officer for about 10 years and took over as head of Mobile Phones in January 2004.

"I would think the overall impression of Kallasvuo is positive," said Karri Rinta, analyst at Nordea. "He has had various responsibilities in the last few years, sort of preparing him for this position."

Nokia was hit by fierce price competition in the second quarter and shocked investors last month with a weak forecast for third-quarter profits.

Though demand was stronger than expected in the second quarter it mainly came from markets such as Asia and eastern Europe where growth was generated by sales of cheap no-frills handsets.

That, combined with tough competition, hit margins in the industry and the company forecast this would continue.

Kallasvuo said he was the man to lead Nokia and meet its challenges.

"I am sure I do have the fire," he told a briefing.

"Nokia needs to lead the changes in our industry, not to follow."

Earlier this year Ollila said he believed his successor should come from within the group and that discussions were expected on the position later in 2005.

"I remain strongly committed to Nokia and am keen to continue contributing to Nokia's strategy and renewal, helping it to build on its position as the undisputed leader in mobility," he said.

Ollila said he had agreed to stay on for a limited number of years as non-executive chairman.

Urban Ekelund, analyst at Swedish equity research group Redeye, said Nokia appeared ready for a change of leadership.

"He (Ollila) has been there a long time and new blood is needed because of Nokia's future challenges," Ekelund said.

Nokia lost two of its core managers last year, when former Mobile Phones unit head Matti Alahuhta and Networks leader Sari Baldauf both quit.

Nokia also announced that President Pekka Ala-Pietila would resign with effect from Feb. 1.

Kallasvuo takes over that role along with the post of chief operating officer from Oct. 1 in the run-up to becoming CEO.

The company has not yet named a new head of the Mobile Phones division.