The world's largest phone maker by volume, Nokia, has started to look for a new chairman to take over from next year's annual general meeting, current chairman Jorma Ollila said on Tuesday.

Ollila, who led Nokia's transformation from a rubber boots-to-TVs conglomerate into a mobile phone giant in the 1990s, confirmed on Tuesday his plan to step down.

It was a tough year, and I expect the year ahead to be a tough one too, Ollila told an annual shareholders meeting.

Ollila's announcement comes as the Finnish technology giant has lost No. 1 position in phone industry to newcomers Apple and Google.

To turn around its smartphone fortunes, Nokia's new Chief Executive Stephen Elop in February unveiled a deal to start using Microsoft's unproven software instead of its own Symbian platform.

Elop on Tuesday reiterated that Nokia would receive billions from Microsoft as part of the deal, including substantial payments for use of patents.

Uncertainty over the success of the Microsoft deal has driven Nokia shares down 25 percent since the deal was unveiled, and the stock is trading at a mere third of what it was worth three years ago.

For a long-term shareholder, the situation is almost catastrophic, said shareholder Pekka Jaakkola. Last week, Nokia said it will axe 7,000 jobs, including outsourcing its Symbian software development unit, to cut 1 billion euros ($1.48 billion) in costs.

(Reporting by Tarmo Virki)