HELSINKI/LONDON: The chief executive of Nokia Siemens Networks has resigned and will be replaced by Rajeev Suri, head of the telecom equipment maker's key Services unit, Nokia said on Tuesday.

Suri, 41, joined Nokia in 1995 and has been an NSN executive board member since 2007. Services are gaining in importance for western vendors as they struggle to compete with hardware pricing from Chinese rivals like Huawei.

Suri will take the helm at NSN - a distant second to Ericsson in the shrinking global mobile network-gear market - from October 1. Former CEO Simon Beresford-Wylie will leave in November after a handover period.

"We began a comprehensive succession process when Simon shared his desire to depart at the appropriate time," Nokia said in a statement. A spokesman said no significant change in strategy was anticipated.

Nokia shares fell 2.2 percent to 9.49 euros by 1144 GMT, underperforming the European technology index , which fell 0.9 percent.

"Nokia Siemens is between the devil and the deep blue sea - it's neither a technology leader nor a cost leader," said Richard Windsor, global technology specialist at Nomura.

"The key for us is gross-margin recovery, and at the moment that's looking like a pretty tough thing to do."

NSN's second-quarter gross margin was 28 percent, down from 31.5 percent a year earlier. Sales fell 21 percent year on year.

Nortel loss

NSN had hoped to boost its market share, especially in the United States, and improve profits with the acquisition of the wireless assets of bankrupt rival Nortel Networks.

But Ericsson snatched the assets from under NSN's nose in an auction last month, paying $1.13 billion compared with NSN's $650 million bid.

Nokia Siemens has predicted the telecoms-gear market will fall some 10 percent this year. Rival Alcatel-Lucent has forecast an 8 to 12 percent drop.

Beresford-Wylie, who holds dual UK-Australian citizenship, joined Nokia in 1998 and held several positions in Asia and Europe before taking charge of the company's Networks unit in 2005 and then Nokia Siemens Networks in 2007.

He guided the merged businesses of Finnish phone maker Nokia and German engineering group Siemens through a tough integration, complicated by a major corruption investigation into Siemens, which centred on its telecoms units.

"I've been around (the industry) a long time, and it's a very opportune time for change, both for my family and the company," Beresford-Wylie told Reuters by phone.