Nokia has ousted embattled CEO Olli-Pekka Kallasvuo and appointed Microsoft’s Stephen Elop to take his place amid the company’s struggles to compete against high-end cell phone manufacturers.

Jorma Ollila, chairman of Nokia’s board of directors, said at a press conference that the company began looking for a replacement to Kallasvuo in late May.

“The time is right to accelerate the company’s renewal; to bring in new executive leadership with different skills and strengths in order to drive company success,” Ollila said in a statement.

Elop’s appointment as president and CEO of Nokia becomes effective Sept. 21.

“My role, as the leader of Nokia, is to lead this team for this period of change, take the organization through a period of disruption,” Elop said at a press conference. “My job is to create an environment where those opportunities are properly captured to ultimately ensure that we are meeting the needs of our customers while delivering superior financial results.”

Elop, a native of Canada, currently heads Microsoft’s business division. Before joining Microsoft, Elop held posts at a number of U.S.-based companies, including Juniper Networks and Adobe Systems.

Ovum principal analyst Tony Cripps said Elop’s appointment was a sign the company recognized it must improve its performance around software, the Internet and developer ecosystems.

“Elop’s history with Microsoft and Macromedia/Adobe in particular should prepare him well for this challenge, although it will also be incumbent on him to keep growing Nokia’s core handset business, a market he is as yet largely unfamiliar with,” Cripps said in a research note. “Balancing this requirement with the need to move Nokia forward in new areas may prove a difficult challenge to manage effectively.”

UBS equity research analyst Maynard Um said he thought Elop was a good candidate for the position, but expressed similar reservations to Cripps. “The key question will be whether or not Nokia will change their software approach towards either Windows Phone 7 or Android,” Um said in a research note.

Kallasvuo will leave his executive post and position on Nokia’s board of directors, but will continue to chair the board of Nokia Siemens Networks in a non-executive capacity. Kallasvuo worked at Nokia for the past 30 years.

Kallasvuo is walking away with a severance package worth at least $5.85 million, plus 100,000 shares of Nokia stock granted to him in 2007, which vest on Oct. 1, 2010.