Will Motorola Rise From the Ashes?

An anonymous reader writes "According to ZDNET the once almighty Motorola is going to split into two companies, 'If the split goes through as planned, what will remain will be the "broadband and mobility solutions" business, which includes enterprise mobility, government and public safety, and Motorola's home and networks divisions.' Engadget claims to have an insider's email that details where it all went wrong, paying particular attention to mismanagement at the highest levels. What makes all of this even more of a shame though is that Motorola's latest product lineup seems to be receiving critical acclaim but with the company in so much termoil, will it ever rise out of the ashes?"

The Real Motorola Split in the 90s

Moto split up in the 90s, 3com swallowed them. You might remember the bit sufer modems of the time that all support was dropped from.

The second split in 10 or 15 years.

The problem with Moto is that they were always good at engineering, but not good at asthetics. Now they are good at asthetics, and sometimes engineering.

Re:The Real Motorola Split in the 90s

Moto split earlier this decade. Half of it (the semiconductor, comms stack, and automotive parts) became Freescale Semiconductor.

Re:The Real Motorola Split in the 90s

Not quite. A large part of their semiconductor business (mostly discrete, analog, etc.) became "On Semiconductor" (what a stupid name). The PPC stuff, RF stuff, and automotive stuff went to Freescale.

Re:The Real Motorola Split in the 90s

For me, that's the "real" Motorola. The folks that architected the 6809, the 68000, the 68k peripheral set, and from there designed embedded CPUs that really were single-chip systems. They had far-reaching vision when they designed the 68k... then they dropped the ball with the 88k RISC architecture but knocked another one out of the park with the PowerPC embedded MCUs and CPU cores.

The company I worked with at the time was a competitor of Motorola in the cellular handset market, and so we reviled them for their chutzpah in patenting RF power control and modulation schemes, but their micros and their automotive power semiconductors were awesome back in the day.

Re:The Real Motorola Split in the 90s

Their company may turn around like HP did [aol.com](please see the 10-year chart for the whole picture) after they boot the incompetent upper management like HP booted Carly Fiorina(note: she ran HP from 1999-2005 and oversaw the HP/Compaq merger, among "other things").

On the other hand, it may be interesting to see what would happen if Motorola split "for real" just as Agilent split from HP.

Re:The Real Motorola Split in the 90s

... after they boot the incompetent upper management like HP booted Carly Fiorina...

Hey! Speaking of which - guess what she's doing now [huffingtonpost.com]! Yet another reason to avoid McCain like the plague!

Re:

Actually, it's the third split. Motorola spun off it's semi-conductor division in 1999. Business Week article [businessweek.com]

Wrong, yet modded +5 Insightful

Moto split up in the 90s, 3com swallowed them.

Fact check please. [wikipedia.org]

Ah, but it was said with such certitude...

Re:The Real Motorola Split in the 90s

I worked in Motorola's research labs for about 5 years. I've been out of that for the last year and a half.

My experience there was there was a lot of ideas being bounced around, and anytime one idea caught traction, Motorola would pander it around, loose interest, and sell it off to someone else to make a fortune on. Eventually, as Zander came on, Motorola drastically scaled back R&D, shutting down whole divisions doing hard science. Then, it came to pass that all R&D projects had to have a 'buyer' in one of the profit making sectors, which led to a scramble amongst the engineers. Suddenly folks were backstabbing one another to try to get a project that GEMS or mobile devices wanted done. I once tried to get the specs on a product that we were supposedly trying to hawk to consumers so I could extend the functionality, only to be ignored or strung out waiting for info. The constant 'fires' I had to put out just to get work done were grating.

I'm not surprised in the least about all this. The writing was on the wall when SPS split off into Freescale. Motorola just refuses to leverage any core competency at all. It's all about being tragically super cool to sell products.

I think mobile devices will tank unless they get someone in there to beat it into shape. GEMS, or what's left of Motorola now, will hang in only because they already have massive infrastructure for gov't and etc. If someone else got into this market, Motorola would be gone.

One thing caught my eye

In researching the myriad claims raised in this letter -- which we believe to be true -- we also discovered a number of other unsettling things about Motorola's corporate past in the last five years, such as certain gross corporate excesses demanded by Zander and his inner circle (like a small fleet of extravagant private jets, where most companies that size might only have one, if any), or the fact that Motorola's current CEO, Greg Brown, is so technologically out of touch he refuses to use a computer for communications, and has all his email correspondences printed by his secretary and replied to by dictation.

The sad thing is that this is way too common in American corporations today. Someone much smarter than I(I think it was in the Economist) remarked that the modern day American CEO doesn't get to the top because they have vision for great products, they get to the top because they are connected and are great at playing financial games. This makes for great short term gains at the expense of any sort of longevity(but by that point the CEO has his golden parachute and is long gone). Carl Icahn also lamented at how woefully out of touch the modern American CEO is, and how much their exorbitant salaries and total lack of accountability and vision make American companies so topheavy they are quickly becoming uncompetitive.

Motorola thought that it could farm everything out and somehow just sit back and reap the benefits of others labor. It was wrong, and yet others are lining up to jump off the same cliff that they leapt from....

Re:One thing caught my eye

Yup. I can personally attest to that. At the last company, the CEO was forced out due to backdating shenanigans (i.e., the stock game that all tech companies in Silicon Valley played). The guy who took over promised at every meeting that he was prepared to take it to the next level, that we were going to kick everyone's butt, etc. Within one year, the company had been sold, and he probably took a 10million+ golden parachute into retirement (the company hadn't even gotten to $1billion in yearly sales) - all for having performed exactly one job; selling the company to someone else. Not only that, but the price for the company had been boosted by financial games with revenue recognition that looked great on paper for the next quarter, but which absolutely wrecked long-term sales. 2 years after takeover, we're finally recovering from the idiocy. It's only because we are the unquestioned leaders in a red-hot market that the company didn't just completely tank right after the sale.

Since then, I've had a very dim view of CEOs and the games they play. I've gotten to the point where I think that a number of companies succeed in spite of their CEOs, not because. Not only that, but the only time that CEOs are held accountable is if they've done something criminal. Being merely incompetent and raiding corporate coffers is enough to get awarded an 8 to 9 figure severance package. Personally, I compare it to someone joining a WoW guild, raiding the Guild bank for everything that's worth anything, and then being handed everyone's gold as an incentive to leave the guild. Despicable doesn't even come close to describing what I think of thse CEOs.

Re:One thing caught my eye

It is almost entirely true. In my view America used to relish competition, because it gave us a chance to show off how great we were. We knew we were better than everyone else, and if anyone else had a problem with that, they could challenge us.

We now seem to be a shell of our former selves. Companies cry to the US Government because of unfair competition, even when most people on the street know what the CEOs don't. The reason why you're doing poorly isn't because the other countries have an unfair advantage, it's because you've adopted myopic views. Profit is created through accounting rather than actual value. Investment in future is disregarded, marketing is key. When you do develop a strategy that works, you take it to the Nth degree, ignoring that the market doesn't need 20 colors for their RAZR or an SUV that can tow a building. It's become all style over substance. Lee Iacocca once ran advertisements for cars of "if you can find a better car, buy it." We need that confidence again, not flags flying in the background and an "American Revolution"

At some point we need to stop this slash and burn style of management, or we will falter. Let's accept that we have competition and we actually need to try, that we can't go on forever simply by chanting "We're so great", we need to shut up and let it be implied by our actions.

For those who want an interesting look at the current situation, spoken better than I can do, I'd refer you to Mr. Iacocca's except from his latest book. http://www.informationclearinghouse.info/article17516.htm [informatio...house.info]

Re:One thing caught my eye

I've gotten the impression that one of the big reasons why American companies run into all these problems is because executives and management all have business or economic degrees. They don't really understand what it is the companies they run do, nor do they seem to care.

That's why we end up with companies like Chrysler hiring the former CEO of Home Depot as their new CEO. What in the hell does a home improvement retailer have to do with an automobile manufacturer? To these people everything is "product". It's an abstraction with no bearing on reality. This why they're so quick to outsource. It's why they're willing to dump obscene amounts of money into marketing instead of research and development. American companies seem to take more pride in "inventing" a brand than they do in producing a real product. Everything always comes off as a gimmick to sucker people into buying their products.

I think Motorola is plagued with the same problem as many other American companies face. They're looking for that one big hit. Instead of following a path of patient improvement and building the overall portfolio they bank everything on a single product. In the process they neglect everything else. When they do come upon something popular they then proceed to milk it to death. The media doesn't help with all their gushing on how the company has turned around their fortunes. They rest on their laurels and when consumers grow tired of the product they find themselves struggling all over again.

I expect Motorola to keep plodding along as they have in recent years. Although, I wouldn't be surprised if they decide to outsource their entire mobile phone business. More than that, they'll dump their design and R&D departments and instead just buy crap hones directly from the Chinese market and rebrand them as Motorolas. The twit responsible for this will be touted as an innovator. Some day the Chinese will realize they don't need American companies and start selling to consumers directly.

When it comes down to it, American companies are quickly turning themselves into nothing more than middlemen. I wouldn't be so bothered by what these CEOs earn if they actually contributed something of substance to these companies. Unfortunately they seem to exist only to make themselves and their shareholders wealthy.

Goodbye, Moto

What makes all of this even more of a shame though is that Motorola's latest product lineup seems to be receiving critical acclaim

But so what?

In the US market, consumers have taken it as given that whatever interesting features a manufacturer builds into its hardware, the carriers will either disable them outright or make them into carrier-branded pay-per-use features.

Camera? Pseudo-GPS location services? Directions/navigation? Local restaurants? Even something as simple as using your PC's desktop wallpaper as a background image is pay-per-use. Web browser? Nope, pay-per-byte. Music/Video? Nope, browse your carrier's licensed pile of top 40 crap. Better mic/speaker for actually making phone calls? Nope, it's all compressed down to underwater-quality-burbling by the carriers anyway.

This situation isn't unique to Motorola; carrier lockdown has made wireless phones a commodity, and has threatened all manufacturers. What's the difference between a Motorola ABC or a Nokia XYZ when every potential differentiating feature has been disabled by every carrier?

Re:Goodbye, Moto

Last figures I saw showed that the US mobile phone market was around 7% of the global mobile market. That's barely even significant, and considering how hostile it is to hardware manufacturers it's probably one I wouldn't bother competing in. It's not even as if it's worth it for the marketing - no one buys a phone because it's popular in the USA.

Management and Leadership

It's yet another classic case of a complete lack of management and leadership, way too much politics and a complete lack of understanding of what products they're selling and how they're produced. The products were actually there, and the people (one who sadly passed away), to achieve success were there, but it's been squandered. They're not the first, and they won't be the last. The management and executives at Motorola are, and were, incompetent losers, and that's the label they carry and the price that they pay for those golden parachutes.

Desperate measures such as the breaking up of a business is always a big indication that no one has a clue what to do and that people who don't understand what the business does have taken over.

Re:Management and Leadership

"The management and executives at Motorola are, and were, incompetent losers, and that's the label they carry and the price that they pay for those golden parachutes.

When you have $100 million in the bank I'm pretty sure you really don't care what label you have to wear. That is the fundamental problem with the current system. Most execs, especially in America, are just looking for the big score to get their FU money. They will do anything to get it including completely cratering the company they are running. There are people like Jobs, Ellison and even Gates who are/were looking to build sustainable empires, but most execs are just climbing the ladder until they make the big score and they could care less what kind of devastation they leave in their wakes or what people think of them after. If they can milk some underlings and be successful and get even richer they will but if they actually have to be smart and work hard to succeed.... why should they, they know they will still be rich when they get cashed out so why not just be a jet setter, party and screw the pooch.

The preventive measure against this is supposed to be a board of directors who keeps an eye on the execs and make sure they do the right thing for the long term health of the company and shareholders. But most boards are now so incestuous that they are just there to not make waves and get as much FU money out of the deal too. If you get all your friends on your board and you serve on their boards you develop a system where there is no accountability. At the end of the day its only big shareholders like Icahn who have huge stakes in the company that can enforce any accountability. Unfortunately its really hard for someone with a 5 or 10 percent of the stock to do anything unless shareholders band together and elect new boards. The only problem is shareholders aren't really interested in the well being of the company either, they often just want to pop the stock price so they can cash out and make some more FU money.

The only really good companies are the ones built from scratch where the executives are the same people who risked everything and worked hard to make a company out of nothing, are huge shareholders, and to whom the company is something they built and cherish. They wont do stupid, destructive things because they have their skin in the game. Its the rock star CEO's that are the cancer. They walk in the door and are handed huge stakes in companies that they did nothing to build and nothing to earn. They could care less if they destroy it as long as they cash about before it craters.

Frustrating Shame

I worked at MOTO for two years. Though I wasn't in the mobile division, I got to see a bit of the sausage factory, and was there when the iPhone was announced last year.

It was obvious to me when Apple announced the iPhone that MOTO was going to have a problem on its hands in very short order. Although the pricing made it unaffordable for Joe Sixpack, it was immediately apparent that Apple had, at a single stroke, completely redefined the cell phone experience. Every mobile product that was more than eight months from release should have been killed immediately, and all the freed up personnel should have then stared at the iPhone demo video for two weeks straight until the UI principles became ingrained. New design ideas could have then flowed out of that. It could even have been done inexpensively.

Had they done that last year, they would have had new prototypes to show by now, they could have started generating buzz, and could have remained relevant. Now, it will take a hugely expensive effort to keep the division -- possibly the entire company -- afloat.

Schwab

Re:Frustrating Shame

I worked at MOTO for two years.

So you're to blame!

Can't go bankrupt fast enough...

For my money, Motorola can't go bankrupt fast enough, and I hope they manage to take Sprint/Nextel down with them when they go. I've suffered through three versions of Motorola's Nextel "ruggedized" phones:

The "i1000 plus" flip phone where the most gentle use would irreparably break the flip cover (which was not available to the service centers as a repair part)

The "i58sr" which had no screws holding its boards together (so required a weekly drop to the floor to reseat the connectors inside) and made such a loud "BEEP" in your ear when Nextel dropped a call (i.e. constantly) that I threw one through a car windshield. I had people across the room turn their heads and say "Ouch" when the thing would make that sound - I suspect it permanently damaged my hearing. Nextel's service people disavowed any knowledge of the beeping, and referred one to Motorola. Motorola said that nobody had ever reported this problem before, but then acknowledged that they had no actual way to know if anyone had ever actually done so, since they had no bug tracking or ticketing system (I used to call in about once a month to see if they'd fixed it yet). Finally a Motorola guy said that it was definitely a problem, but that Nextel had insisted they add the beep to let users know the calls were dropped, then told the service people to lie about it.

The "i315" with a smaller screen than the i58sr, but the same text strings in the firmware (so most of the menu items are wider than the screen and are only visible with line scrolling). The developers seemed to have gone through the firmware and deleted any items which were actually useful, such as "Alarm Clock", while adding a digital unit-to-unit radio which only works if you have the cell phone and walkie-talkie functions _disabled_ - a.k.a. a completely useless feature which never made it to other handset models.

At this point in my life, I wouldn't take a Motorola product - ANY Motorola product - if they paid me to take it - and Nextel has tried repeatedly. (I remember some poor Sprint telemarketer bravely going through her script offering me more and more Motorola junk as I told her more and more how much I despised all things Motorola and Nextel.)

The minute the FIC FreeRunner is available, I'll toss Motorola and Sprint/Nextel to the curb and never look back. And I'm just a _cellphone_ user - imagine the poor police/fire/rescue folks who are stuck with Motorola digital radios which don't work inside buildings, and which automatically deplete their batteries if they also carry a cellphone...

Free the Motorola 68000!

(For those too young to remember, that is not an oblique open source joke. It's a managerial style joke.)

Seriously, Motorola would be trivial to turn around. I could manage it in a fraction of the time it would take most executives to, and I'm cheap at the price. So could many geeks who have a similarly broad-based background and no patience with waffling. (Waffling should be left to waffle irons.)

Of course, no geek capable of running Motorola will ever be offered the job. We're far too outspoken, way too radical, most (myself included) have never been contaminated with a Harvard business degree, and most (again myself included) have managed to avoid managerial roles because we can't stand having zombies as co-workers. (Holy water supersoakers aren't enough.

Motorola won't hire anyone dangerous enough to succeed. And this is a mission where you need someone who is dangerous, a wildcard, unpredictable. You don't hire a banker to pull off a commando raid, you don't hire a businessman to rescue a disintegrating corporate giant. If they had any sense, they'd be looking for a troublemaker. They WANT Motorola to cause trouble. Causing trouble means they're still breathing. This troublemaker must be able to come up with novel, irrational, but totally brilliant solutions to the current engineering problems. Only problem is, The Doctor doesn't like being pinned down like that.

There is one other option, which has a better chance of success. Start a new company, a company that, businesswise, should logically not exist, that makes no sense given current attitudes, but sells like nothing else. Then openly and outright offer each and every (decent) engineer at Motorola the option of jumping ship. Don't buy the IP, buy the workforce. What's Motorola going to do? Sue each person individually over non-compete? And will the courts even listen to such a case if Motorola isn't producing anything worth a damn to compete with? Yes, it's playing with fire, but look at every single brilliant engineer, every single brilliant company owner, anyone who has ever truly risen far enough above the masses to see anything worthwhile - they all played with fire, in the most insane and dangerous ways possible. And they made it work for them.

Brilliant Roll Model

If Six Sigma [wikipedia.org] can do this for Motorola, imagine what it can do for your company!

The problem with Motorola

I think there were few major problems with Motorola: 1) going everywhere, but ending nowhere, and 2) lately trying to find a hit product instead of churning out good products.

Now you might be asking what I mean by saying going everywhere, but ending nowhere. Well simple, Motorola always had more than one technology always in production and in planning. In operating systems front they first went to Symbian, then started their Linux project and in the same embraced Windows Mobile. Now compare this to Nokia that just concentrated to Symbian, no Linux, no Windows Mobile. Only lately Nokia has introduced Linux based Internet Tablets just to gather some experience, but they still are 100% committed to Symbian. In my opinion Motorola should have committed to Symbian as strongly as Nokia and Sony-Ericsson did, maybe allied with Sony-Ericsson in using UIQ.

The second problem with Motorola relates to first problem. As I said Motorola jumped everywhere in their search of finding a hit, as can be seen in operating systems front. The front where Motorola really failed was in introducing new phones. They had a hit with RAZR, which created an illusion that they were onto something. In reality they just had luck, and what they should have done, would have been to introduce tens of different variations of the phone. Now compare to Nokia witch doesn't really have hit products, but instead it has a large collection of small hits and fairly trading phones. When I just looked at Nokia's European web site I counted that they have 92 phones/devices available. Motorola really should have copied Nokia's formula on doing few platforms and customizing them rapidly and introducing countless of different phones with short life cycles.

Now, it might seem to some sad that Motorola is spinning their cellphone division out, but then again that might be the best option to take. When the cellphone division are their own company, they will concentrate into a one thing and a one thing only and either succeed of fail. I think a good example of this would be Sony-Ericsson where both Ericsson and Sony spinned their mobile phone divisions, and after the spin out the company has succeeded fairly well.

Re:Whats "termoil"

It's what you get from grinding up termites, I think.

Re:Test of time

I'm sure many people felt that way about Bear Stearns not long ago, and there was also this company called Enron that originated in the 30's... A company is not safe from falling apart if it is poorly managed no matter how much history it has.