Posted 2 years ago
Posted 2 years ago
Part of a Storybook
A storybook for business enthusiasts to know how their favorite business came into being.
Even the mightiest fall. But why?
Motorola was a pioneer in mobile communications and helped shape entire markets with groundbreaking products.
But now, it’s gone. And, yes, we can summarize this episode and say that it was a giant failing to act upon change. But we’d be lying, because there’s more to. It was culture and management that killed Motorola.
When Did Motorola Start?
In 1928, brothers Joseph and Paul Galvin purchased a bankrupt radio technology company for $750. Soon after that, Paul decided to make portable radios which could be installed in cars.
Since he aimed at cars, he wanted a catchy name. He combined motor, with a popular commercial suffix, ola (as in Crayola and Victrola), to create Motorola.
These radios, and the name, were a hit.
So, the Galvins changed the company name from Galvin Manufacturing Corporation to Motorola. But it didn’t stop with prehistoric car radios.
They also created receivers for police, portable FM radios and TVs.
Motorola’s AM SCR-536 radio became a cornerstone in military communications and helped Allied forces during World War II.
Then they came up with the first portable, large-screen television.
The first transceiver to be used in space.
The first hand-held portable telephone.
And the first commercial cellular device.
They even created the Six Sigma quality process in which 99.99966% of all opportunities must be free of defects.
Just a note: historically, Motorola has had two main divisions: communication services, known as Solutions and mobile phones, known as Mobility.
Mobility would launch Motorola to new heights. But it was also the most troubled division. Its history helps shed a light on how flawed culture spread inside Motorola like a virus, eventually killing it.
How did it all go wrong?
Motorola was the largest mobile phone manufacturer in the world before Nokia knocked them off their top spot in 1998. The firm had a brief resurgence in fortunes with 2004 launch of the Razr, the world’s top-selling clamshell mobile and one of the thinnest ever produced. But between 2006 and 2009, Motorola’s mobile market share plummeted from 21% to 6%.
Motorola’s problem was that it was a hardware technology company, but from the mid-2000s it was software driving the mobile phone business. Here Motorola was weak – their phone’s interface was seen as clunky compared to its rivals, and their smartphones dithered between Linux and Windows-based operating systems. Products such as the Motorola Q, a Blackberry-like smartphone with a QWERTY keyboard, fared poorly compared to the competition, while the arrival of the Apple iPhone in 2007 changed the game for everyone, as the mobile phone morphed into a pocket computer.
Recent Advancements
In 2009, under CEO Sanjay Jha, Motorola refocused on producing Android phones, launching its Droid phone range which was picked up by US telco Verizon. That Droid sales exceeded those of the iPhone in the US encouraged Google to take an interest in purchasing Motorola. And so in 2011, Motorola was split in two: Motorola Mobility, which focused on consumer devices including mobile handsets was sold to Google for US$12.5 billion in May 2012, leaving the rump as Motorola Solutions.
Motorola’s appeal to Google was as a manufacturing company to produce its own devices, the Nexus phones, and to gain access to Motorola’s patent catalogue. The Moto range of smartphones released under Google’s ownership were well received, with the entry level Moto G garnering 6% of the UK market share in Feburary 2014. The high-end Moto X fared much more poorly, and US manufacturing was closed and moved to China and Brazil.
Today Motorola Mobility has a 1% share of the global mobile phone market, but stronger in the US with around 6.8%. Nevertheless the continuing global market share decline and year-on-year financial losses saw Google sell the firm on once more, to Lenovo for US$3 billion in late 2014. For Lenovo it was a opportunity to gain foothold in the US market with an established brand.
So for while it seemed as though Motorola would live on – albeit a pale shadow of its former self – under Chinese ownership. Instead the company that gave us the mobile phone and so many world firsts has ended its days passed from pillar to post, sold and re-sold, until the iconic Motorola brand was finally merged out of existence.
And so Motorola joins a group of departed tech giants that ploughed a similar path: Atari, Commodore, SGI, Sun – how the mighty are fallen.
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