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(Sorry for the throwaway; I still work for the same company and we we still have various relationships with each other.)
I worked in like '04-'08 building third party mobile software for a large variety of manufacturers and devices. Remember, this was pre-iphone, so there was a big business in building component X for device Y on platform Z.
In my experience of device manufacturers:
Nokia was insanely arrogant; the google of its day. Sony Ericsson were quite good, it showed that they wanted to build a quality experience.
The Japanese manufacturers were absolutely insane. They would routinely produce P1 bug reports in the style of "we opened the X application repetatively. On the 1154th time it crashed on start-up. Sometimes."
We had a few projects with Motorola together with US carriers. They were total nightmares - the Motorola engineers seemed like they had been picked up from the streets of Hyderabad the day before. (This is not a racial prejudice: most of the Indian engineers I've come across in the industry have actually been remarkably talented. This is not valid for the Motorola engineers though.) Most of these device projects were very high profile in the US, and presumably important for Motorola; yet they couldn't or wouldn't muster better staffing.
Hmm. Maybe that's why Google kept about 600 or so out of 17,000 or more.
The streets of Hyderabad, eh? I can only imagine, having been there about 2 years ago. The level of construction and build-out is amazing. Where are all of the "trained" workers going to come from?
This is really a fantastic, in-depth article, and highlights a lot of pieces about Motorola's history of which I was totally unaware. The breadth of their innovations was far greater than I realized, and the early decision to set up a world class shop in China seems to be very visible today in that area of the world.
That the internal competitions eventually led to internal war between different "tribes" doesn't totally surprise me. It seems you always read about that eventually happening in the post-mortem of any company with that type of structure. I wonder if there's a good way to balance internal competition. I imagine you would have to keep close watch on the overall silo-ing of each department.
I'm from the Chicago area, and I remember driving by their campus many times over the years as a kid, only really having an idea that they were somehow involved in phones. I was in high school when the Razr came out, and based on how popular it was I thought Motorola was an absolutely world-dominating company, not a business on the rebound from extremely heady heights.
I used to work in their cell phone sector, then moved to corporate IT. The joke at the time was: A meeting was called between Chris Galvin (the CEO at the time), and the heads of the various departments, to show their new technologies. The cell phone guy says "We have a new cell phone, that you can also send and receive pages on it". The guy from the 2-way radio sector says "We have a new radio, you can use it to make cell phone calls on too. And we are working on adding paging capabilities to it". Then the guy from the pager sector plops his device on the table, and says "Our new pager is 2-way, and we've add the ability to make calls on it, with a earpiece attachment. And it has a built-in FM radio".
And all the devices took a different power adapter, and different battery.
I was in Motorola labs until 2003, and the article is spot on.
I had heard crazy stories back then, for example how the handset division (PCS) had to reverse-engineer Motorola Semiconductor products after buying a phone on the street in Hong Kong because they could not get the specs internally.
The whole idea of Motorola competing with itself sounded as crazy to us then as it does now.
Motorola was way too silo'ed and metrics driven, with a ruthless focus on efficiency, that was often short sighted. I guess no one there read the Innovators Dilemma.
I once had a coworker who used to work at Intel tell me that when a company or product has no competition, it's time to find somewhere else to work, because only bad things will happen to that company's culture.
I kinda suspect that companies in this position are damned if they do and damned if they don't. If they foster internal competition, then the place becomes overly political, nobody cooperates, it becomes miserable to work there, and all the good people leave. If they don't, then there's no sense of urgency, everybody goes off and does their own pet project, people waste time on silly stuff, folks who pay attention to external customer needs can't get the necessary internal buy-in, and all the good people leave.
Eventually competition springs up externally, but by then the organization may have ossified so much that it's incapable of responding to it.
It almost makes you think a good idea might be to fund high performing employees to form their own companies to compete with you. Basically incubate your own competitors, but hold a minority stake in their companies.
Where is Google in this context then? They are the 800 pounds gorilla, but a steady stream of innovations still seems to flow from them.
Drawing lessons from The Innovator's Dilemma is harder than it seems.
In the early 2000s, Nokia's management team often referred to the book. CEO Jorma Ollila has said that he tried to build a corporation that would avoid the traps described in the book. Yet when we look back now, it seems obvious that Nokia was coasting on increasing profit margins and incremental innovation to drive its featurephone and Symbian smartphone lines.
How did that happen? My impression is that Nokia misjudged their market position. They saw themselves as the upstart innovator as compared to traditional PC vendors.
Just before the iPhone was unveiled, Nokia introduced the N95 smartphone with the tag line "This is what computers have become." In Nokia's eyes, their phones were going to disrupt computers in a few years. But they were beaten by Apple's better vision of what the disruptive mobile computer should look like, and they never recovered from that punch.
It sounds crazy (and is crazy), but that kind of corporate structure is surprisingly common. There's probably some executive training manual somewhere that advises this kind of nonsense. I think that manual is called "The Prince".
My first guess is that, in a perfect world, you would reduce the internal competition accordingly as the external competition grows.
When you are the only one making phones, internal struggle is good; when you are one of many, internal struggle makes you vulnerable.
Stupid "free market" ideologues. Edward Lampert is another one, doing the same thing and killing Sears.
Not so fast.
It seems clarity of focus and mission counts for a lot. When I look at a company like Sears, I don't get the sense of focus I get from a company like Apple.
It's surprising how little clarity the rank-and-file of many businesses have around what they're actually doing. In the case of Sears, are they trying to compete with Amazon? Or be a great local retailer? Or make great tools (Craftsman) and sell them directly and/or through channels?
Metrics are important but they aren't a substitute for vision and focus. When I see businesses driven from the very top levels of executive management strictly by metrics and numbers, I often wonder whether it's a symptom of a lack of focus and clarity from the folks at the top. Metrics are a great management tool, but they aren't good for setting direction, or leading.
The rise and rapid fall of Iridium fascinates me. They poured so much money into something with so little chance to succeed. And yet, it survives to this day. Essentially, the original investors inadvertently gave the system as a gift to the world.
One story that has stuck with me goes that there was a presentation pitching the business case for Iridium. One part of the presentation goes, cell phone usage is projected to rise by X by the time Iridium becomes operational, leaving the market of Y - X for Iridium. Another part of the presentation goes, cell phone usage has consistently outstripped expectations by a factor of four, therefore our upside is even greater than we might expect. Apparently not realizing that the two claims contradicted each other, and that if cell phones really were growing so fast, it would mean little would be left for Iridium, which is of course what happened.
But I can't remember where I saw it, and I can't dig it up now. Anyone happen to know if I'm remembering anything remotely close to reality, and where I might find info on it?
The funny thing is, they were right. Satellite phones are a big deal in places with limited/no infrastructre.
What they got wrong was the deployment details, too much weight was put on providing service to places where nobody actually is, like 75% of the Earth's surface that's ocean. So they ended up with 66 satellites in a polar orbit.
A better idea is like the Thuraya model, put a couple satellites up in geosynchronous orbit (so you maintain coverage) and get a huge coverage cone.
http://www.thuraya.com/network-coverage
Today, with two birds, Thuraya covers 161 countries, pretty much all of Europe, most of Africa, all of Australia, and most of Asia and almost all of the coastal areas you're likely to find significant ship traffic in.
Even better, the phones are basically GSM phones and use SIM cards (they even look more or less like a normal cell phone and I believe you can use them for terrestrial service if you're within distance of a normal cell tower), you can get data service at 60kbps. Not blazing, but if you're stuck out in the middle of the Gobi and have a full battery you can check email and tweet. There's even sleeves you can get for smartphones to turn them into sat phones and indoor repeaters so you can use the phones indoors.
Two more satellites and they could provide something like 90% global landmass coverage.
Really the only people Iridium could ever have sold to would be the Navy. Which is basically what happened.
(apparently a next generation is being planned for 2015-2017 Falcon 9 launch series)
> Really the only people Iridium could ever have sold to would be the Navy. Which is basically what happened.
According to Wikipedia, as of 2012, service payments from governments accounted for only 23% of revenue.
I thought there was greater latency between geo and ground and polar and ground? Does that factor in at all?
Seems that latency was a really big deal for them as well. With geosync you get a half-second delay or so, which is annoying to converse through.
But surely it's not $5 billion annoying!
The story I heard, and I don't care enough to even go looking for a link, was that some executive's wife couldn't make a phone call while on their yacht and thus the idea of Iridium was born.
Whether or not that is true (and I would guess it's either not, or heavily exaggerated), either your story or mine does seem to drive home the misplaced optimism of the Iridium investors.
Speaking for myself, when I'm touring the US on a motorcycle I can make do with some lack of cell coverage. If I really cared that much, and needed emergency communication, I'd bring a handheld amateur radio with which I can just about always hit a repeater when a cell phone has no signal. If I were to absolutely, positively have to have some means of emergency comms, I'd go buy a SPOT for a lot less than Iridium. And if Iridium ever had a chance to at least be viable, SPOT seems to have put a nail in that coffin.
So the market we're left with is folks that have a need to vocally chatter to someone else no matter the circumstances. There are only so many war zone reporters and mountain climbers to go around, though.
> There are only so many war zone reporters and mountain climbers to go around, though.
The U.S. Department of Defense is Iridium's largest customer by far, and kept them alive with a large cash infusion at one point (if memory serves).
Also, fun fact: iridium modems provide the only continuous data link for the U.S. South Pole station. There are 12 modems ganged together, used for e-mail and weather info transfer. Bandwidth: 28.8kbps. (the station also has several high-bandwidth uplinks, but the coverage windows for those are limited, and they have to compete with NASA/ISS for bandwidth).
It was actually a wife of an executive on a cruise, not a yacht. It looks like you can get cell connections on a cruise now, but I think it took quite a while. Remember, this "idea" was born around 1990.
If you haven't looked, it's actually quite reasonable now to rent an Iridium phone for a backcountry trip these days. If I was taking some boy scouts into the wild for long weekend, I'd definitely consider it in case of emergency.
The system was really a great piece of technology; MOT really let the engineers go at it. If it wasn't for the billing and provisioning, you could actually make an Iridium-to-Iridium call anywhere on the face of the earth in some sort of doomsday scenario, since all of the call routing goes between satellites—you don't need a ground station.
When I started at MOT, we were working on the broadband followup, Celestri, which turned into Teledesic. Same deal, anywhere on the globe, but around a 1-2Mbps connection, rather than Iridium's 0.002Mb data rate. It was a magnificent piece of engineering with hundreds of engineers working in a fancy new building with plans in place to double the building in a couple years as hundreds more engineers were coming on for the detailed design phases.
We were about 9 years from operation and had thousands of pages of architecture and design documents. I think the highest-level system design document was around 500 pages when it was shelved, but there were already some architecture documents running into the thousands of pages.
The projected launch costs alone were around $15B; that's not including actually building anything. It was the most expensive commercial project ever undertaken, though after Iridium's disappointing launch, even the most short-sighted executive could see that it was too big of a risk for any company to take.
Looking back, it was an amazing experience to be a part of a project that huge.
Minus mention of the yacht, the Iridium website (http://www.iridium.it/it/news.htm) states that in 1985 Motorola executive Barry Bertiger's wife, Karen,was frustrated that she could not make a call with her cell phone from the Bahamas to one of her real estate clients back in the US.
For some reason, I thought Iridium was supposed to be marketed to "international business" crowd. Isn't that why they were charging $3k and expected people to call a hotline only to leave their contact information and have a follow-up phone call sometime during the next 7 business days? Or did Motorola believe that the market was moving from analog to satellite, as opposed to analog to digital?
There are no cell towers in the ocean. That's a lot where they get used.
Iridium was seen as the way to go based on the best predictions around. The investors thought it was a sure thing.
McKinsey made a prediction that there would be about 900K mobiles sold in the US in 2000. They were off by 10s of millions or thousands of percent...
This link says it was made in the early 1980s but the prediction was later than that. http://www.samizdata.net/2007/06/fun-with-statis/
It seems amazing now but it was based on the idea that mobile phones would not appear in anything like the numbers they have. The idea that in places like Africa where getting a phone took 10 years that they would have hundreds of millions of cell phones would have been seen as pretty crazy in 1989.
I'm sure he thought that Iridium usage would appeal to a fixed or proportional fraction of the cell market . Would it? I dunno. People still use Iridium where it's appropriate.
I got a slideshow of the Iridium deployment as part of a startup JV'd by Moto circa 1999. Iridium was one big ole project. Yep.
All this being said, Iridium lasted far longer than the startup.
It really is shocking what a shadow of its former self Motorola has become. There was a time, not all that long ago that Motorola CPUs were a really valid alternative for a huge percentage of personal computers, that's really impressive.
Atari, Commodore, Sega, Apple, SNK, Sharp, Texas Instruments, Sun, and more all made significant systems with their chips.
Motorola Semiconductor was spun out to become Freescale. They're very much alive and kicking.
Their i.MX series of application processors are in a lot of devices.
http://en.wikipedia.org/wiki/I.MX
The old 6800/68000 cores live on in the S08/S09 and Coldfire lines.
i.MX ships are ARM architecture no?
I just think it's a shame the 68k architecture didn't last at least into the Pentium age.
I have Moto G, and Moto G 4G phones and they are very, very good. And they are selling well.
Second that. The Moto G 4G punches well above its weight and I couldn't be more happy with mine (speed, battery life, fit & finish - it's all excellent).
The only thing that isn't great is Lenovo buying Motorola. I have a feeling this will mean we wont get many android updates in the future :(
Ditto the Moto E, for a slightly different set of compromises.
As a Nokia employee, reading this article is like viewing my own corporate history through a funhouse mirror.
At least Motorola didn't make tyres, right?
Great article and very interesting comments. One big takeaway for me is the fact that Google retained ownership of all patents after they sold the business to Lenovo. It'll be interesting to watch Google utilize those across their entire business, not just on the mobile side.
The patents were one of the main reasons the Motorola buy/sell was such a net win for Google (and that's without considering the benefit of strengthening the diversity of the Android ecosystem, tho we obviously don't yet know how successful that strategy was). When you factor in the value of the patents, the sale of Motorola Home, the tax benefits they got from Motorola's losses, and one last bullet point that I simply can't remember right now (ugh): what looked like a big loss for Google ended up making them something under a billion dollars (and again, this is before considering the value of the actual strategic intent of the deal).
That's strange, they made money on the deal, but got tax benefits from the losses?
I was at Motorola from 90-98. I recall that they were a bloated engineering bureaucracy that didn't understand software at all. The other thing is everyone knew Chris Galvin was going to run the company. Lots of executives left during that period. Finally, the iPhone killed everybody: Nokia, Ericsson, Blackberry. It was inevitable. When markets make big shifts, big companies can't adapt.
However the mid 2000s were the period of the highly successful Razr series which is still the #1 clamshell phone to date in terms of sales numbers. The very first Android phones weren't that bad either.
The RAZR succeeded on design, the software sure wasn't the key attraction of that device. Motorola's phone O/Ses (yes, plural) were all very underpowered.
Something the Chicago Magazine article doesn't really mention is the death of Geoffrey Frost in 2005. Frost spearheaded the RAZR's marketing and started to turn Moto's fortunes around in the early 2000s. After Frost passed, things went rudderless on the eve of the iPhone and Android.
http://archive.fortune.com/2006/05/31/magazines/fortune/razr...
"He also had spun an appealing narrative about how Motorola was cool again, and a myth about the slick downtown Chicago design studio where the phone had taken shape." (Which never existed)
Supposedly the Razr could have had longer legs as well, if they had overhauled it more quickly, rather than tiny tweaks. Don't have the link about that one handy though.
I interned in PCS 2002-2004. Android wasn't out yet (but Danger Sidekick was) and Moto was already working on a Linux+Java OS. That project was the division's great hope, but missed deadlines on and on.
Cramming a Java OS onto 2004 mobile hardware, very risky choice of a savior.
Half the interns used Treo, Sidekick, LG. Half had a Razr.
As a Chicagoan who worked in another closely related telecom company, the presence of Motorola was huge. Not so anymore, but its certainly a 'hallowed' name in the area. You definitely hear a lot of stories regarding the way bonuses used to work, and what it was like working for a company that was sort of "Google-ish" for its day. Its sad whats happened to Motorola, but that is the way the economy seems to work. Another great unmentioned Chicago Telecom name here is Bell Labs. Chicago Mag could certainly write an entire article about the storied rise and fall of that company too.
It just seems like all the Chicago technology greatness has melted outwards to the coasts. Silicon Valley and NYC (as well as foreign businesses) tend to dominate the areas that Motorola, Bell Labs, etc used to rule.
As someone who went to Purdue and would have liked to stay in the Midwest, it astounded me how few tech jobs were available in the Midwest (I graduated in '04).
I didn't get a single callback of any sort from a company in the Midwest until 18 months after my graduation and it was to interview for a 1 year contract position at less than half what I was making at the job I accepted in Southern California. Nearly all my friends had similar situations, ending up on one of the coasts, or Austin.
tl;dr: We gave away our competitive edge to the Chinese in return for goosing short term profits, and are now paying the price.
Thats pretty tl;dr. Just looking at the graph I'd say this part was more important:
"Motorola poured $2.6 billion and countless engineer hours into a $5 billion consortium to develop it. But once Iridium was finally operable in the late 1990s, its bulky $3,000 phones and $7-a-minute calls proved prohibitively expensive. Iridium declared bankruptcy in 1999 and sold off the bits for $25 million."
Because that was when the decline started.
I accidentally down voted you... But meant to up vote.
Anyway, that is exactly what happened. We've transferred so much technology so quickly to China and India. The only hope for g the USA now is that standards of living rise in those counties enough that the wage gap isn't so bad, and more high tech can stay here.