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Application Catalog. Shop Accessories. But much as it had taught the Chinese to compete with it years before, Motorola was teaching one of the most creative, competitive, and consumer-savvy companies of all time how to make a phone. The result: ever-lower profit margins. The company had long numbered among the top 10 American firms registering U. He also blames a less-than-speedy Motorola supplier that, he says, caused the company to miss nearly a year in the product cycle.
Another mistake: Zander never engaged in China the way the Galvins had, leaving the details to his division heads and country managers. When China upped its networks to 3G, his managers pushed what they had—older 2G phones—at steep discounts in order to preserve market share, unbeknownst to the CEO.
The collapse of the China business in left Zander dumbstruck. That year the South Korean company Samsung topped Motorola in phone sales for the first time, and it never looked back. So, in , Icahn began snapping up Motorola shares.
He eventually owned more than 6 percent of the company and fought to seat board members of his choosing. His goal: get the board to agree to break the company into parts in order to maximize its value to shareholders. He succeeded. In , Motorola set a course to split the phone division from the public safety and enterprise businesses.
Zander, of course, was out. A polished man with a calm baritone who sits on lots of boards including that of the Federal Reserve Bank of Chicago , Brown had run the software firm Micromuse, so he had the necessary experience. He kept his corners of the company steadily profitable, maintained high margins, and had a quality that mattered greatly to Icahn: He could see the potential that Icahn saw.
But finding someone who could run the troubled phone business proved tough. The phone business would soon spin off anyway, Icahn reasoned. So he finally suggested that the board hire a co-CEO to work alongside Brown. Brown agreed to the arrangement. Sanjay Jha, a former Qualcomm COO who possessed a deep understanding of both the software and hardware sides of telecom, accepted the position.
The Indian-born, U. I sat for three hours and looked at everything, flabbergasted. There were no smartphones. Jha called a meeting of the engineers to see how current they were. The only way to stop hemorrhaging money, Jha decided, was to slash both costs and the number of phones. At Motorola, 60 managers worked on dozens of different models.
By contrast, Apple heaped all its genius into perfecting one phone. First Jha had to decide what operating system to bet on. I needed first to survive and did not have the resources to put even one engineer on it. The pressure was intense.
Verizon demanded a phone by October Jha chopped 4, more jobs. The pain of shutting his labs in Europe and firing his team had been too great. Jha convinced him to reconsider. On a flight from Europe with Jha, Arshad prepared a presentation for executives back in Schaumburg. It would be only the second such phone on the market. The presentation, held in early , grew heated. One top Motorola executive declared that choosing Android over Windows Mobile was madness.
Jha would not budge. By a vote of 4 to 3, the board members chose the former. Quickly, Arshad handpicked a team of in-house engineers to work closely with a Google team led by Andy Rubin, who had created the Android system. Save it they did—for a while. The new phone, called the Droid Verizon licensed the name from movie director George Lucas, who had coined it for Star Wars , hit the market in October By late , after four years of huge losses, the phone division was profitable again.
For longtime Motorolans, however, the success had to be bittersweet. Droid was not the kind of world-changing invention the company had been known for. Motorola had accepted that the most important innovations in phones were better aped than forged. It had latched its fortunes to a bigger, more powerful company and was surfing in its wake. With its radio brand now a household name in the US, the company formally changed its name from Galvin Manufacturing to Motorola.
In , the company became one of the first US businesses to begin research into solid-state technology. As a result its three-amp power transistor, finally launched in , was the world's first high-power transistor in commercial production. It allowed the company not only to reduce the size of its radios, but also introduce the first personal pocket pager, the Handie-Talkie, which quickly gained wide usage in US hospitals. As semi-conductors revolutionized electronic technology during that decade, Motorola became one of the world's biggest manufacturers of silicon chips.
In , the X11 Portable was Motorola's first pocket-sized all-transistor radio. The same year, founder and driving force of the business Paul Galvin died, and was replaced as president by his son Robert. In the early s, the company moved into automotive electronics, manufacturing alternators and other power-related products. Its radio transponder accompanied the Mariner 2 spacecraft to Venus, and it developed the first rectangular colour television tube.
Later its Quasar set was America's first all-transistor colour television. Motorola also spread its wings, establishing manufacturing facilities all over the world. At the end of the decade, communications with the first manned mission to the Moon were conducted entirely through Motorola equipment.
In the s, the company withdrew from the television market, selling its operations to Matsushita Electric. Instead the group concentrated on its micro-processor business, now in huge demand as a stream of "intelligent" consumer appliances began to flood the market. In the group began work on an experimental cellular two-way radio network This was eventually launched in as the DynaTAC cellular system, and the company was besieged with orders.
The company began setting up its own cellular networks later that decade, especially in the fast-developing Latin American market. During the s, the company continued to revolutionize the functionality and practicality of its range of analogue pagers and mobile phones. But it increasingly concentrated its efforts on the development of a satellite communications system, named Iridium, believing that this would replace cellular technology as the standard in mobile wireless communications.
Unveiled in , the system finally went live in Having dominated early developments in the analogue cellular market, Motorola now found itself overtaken by faster-moving foreign companies such as Nokia and Ericsson. Formed in , it was finally dissolved in Christopher Galvin, grandson of the company's founder, took over as chairman in , but he failed to revitalise the company when it came to making swift strategic decisions.
At the same time it sold off its various interests in local mobile communications networks in Latin America and elsewhere to Telefonica and France Telecom. But despite these financial benefits, Motorola found itself increasingly squeezed as the downturn in the global mobile phone and semiconductor industries began to bite during The group announced a series of cost-cutting programs to dispose of more than 40, jobs, or a quarter of workforce.
Without the benefit of a substantial tax repayment, the loss would have been even higher. Despite signs that the group was beginning to turn the corner by mid , the turnaround was too slow for Motorola's long-suffering shareholders.
Soon after, the group announced plans to spin off semiconductors into a separate company. New chairman-CEO Ed Zander was almost immediately able to report a sharp upturn in financial performance in early , although he also predicted further cost-cutting.
The introduction of a new range of handsets led to a dramatic upturn in Motorola's fortunes between and A key development was the introduction in of a series of stylish and expensive handsets which successfully grabbed headlines around the world.
The first of these was the ultra-thin Razr, a high-end clamshell camera phone only half an inch thick, followed by the Pebl clamshell phone, the ultra-slim Slvr candy bar, and Krzr and Rizr sliders.
The Razr was especially successful, selling around m units in its first few years. The company also forged an alliance with Apple to allow owners of Motorola's mass-market music phones to play music downloaded from the computer manufacturer's iTunes website. The first such device, the Motorola Rokr, launched in late in a partnership with Cingular Wireless. But the Android phone hardware business resembles the PC business more every day.
Google is like Amazon ; the company is willing to break even on hardware in order to increase the market share of its money-making services. But Motorola has already helped Google save what could amount to billions of dollars on its taxes , which softens the blow.
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