¿Qué le pasó a Motorola? Una breve historia

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.

The History of Motorola Mobile Phones

Motorola ventured into mobile phones in the 70’s and by the 80’s, it had created the DynaTAC.

Now, let’s be clear: to the average user, the DynaTAC was a complete mindf*ck.

A phone that let you talk wherever you wanted, whenever you wanted.

Well…NOT REALLY.

There were some drawbacks:

Charging the phone took 10 hours. That’s right, TEN.

You could talk for just 30 minutes.

It weighed close to a kilogram, so it could give you scoliosis.

And then, there was the prize. Set to today’s money, the DynaTAC was worth $9800!

But! It meant freedom. It was elite, exclusive and popular.

In fact, people had to sign up in waiting lists.

So, all these hinderances meant NOTHING, because no one had seen anything like the DynaTAC before.

Continuously Motorola improved and created newer models like the MicroTAC and StarTAC. These had longer battery duration, lighter bodies and were no longer the size of bricks. Some even had GSM technology.

These were even MORE popular.

Motorola grew fast, so fast that it built huge factories to meet demand and even came up with the Six Sigma standard, in which 99.99966% of products are free of defects.

With all this, during the early 90s, Motorola became the biggest mobile phone seller in the world. But, in 1998, Nokia took sole position of first place.  

Nokia duking it out with Motorola. My, how times have changed.

But to explain why this happened, we need to talk about China.

The rising market

During the 80s, China slowly opened to international markets and Galvin wanted a piece of this very, very big pie.

China meant, for Galvin, two things: cheaper production and a larger market. After much pressure, the Chinese government agreed to let Motorola install factories there, with one condition:

Motorola was to educate the manufacturers and suppliers with western standards and practices.

All this to have a piece of a very big market.

But, there’s nothing wrong with teaching the biggest country in the world how to have efficient manufacturing, right?  

Ted Fishman summarizes it brilliantly:  

“Hundreds of Chinese suppliers, including state-owned firms, learned how to make things the Motorola way. Those suppliers, which had second- and third-tier suppliers of their own, spread that knowledge throughout a growing swath of China’s economy.”

And this is key, because it all comes back.

Cultural decisions

So far, it seems that very little went wrong in Motorola. But problems were boiling underneath and they were caused by one thing: company culture.

This goes way back, to the times of the DynoTAC.  

Do you remember what happened to Motorola and the two main divisions? Good.

Historically, Solutions had decent margins but a steady market, relying heavily on tenders and public services, like police and fire departments.

But Mobility sold cell phones in an era where having a DynoTAC meant big bucks. And this meant bonuses, BIG bonuses.

Now, rivalries between divisions within a company are normal. But, in Motorola, profits and bonuses evolved into somewhat of a war, and management did very little to change it. In fact, they embraced it.

In his extensive autopsy of Motorola, journalist Ted Fishman explains:  

“Top management believed in letting the sector heads run the businesses their way. If that rubbed others the wrong way, tough luck. There was no cohesive plan for network technology and handset technology. The two operated totally independently, in totally different directions.”

So, as the two divisions weren’t seeing eye to eye, there was little communications, just when dialogue was key.

By the early 90s, Solutions was already advancing in the use of digital communications, but Mobility didn’t care to make the switch: numbers were great. 1994 saw $22 billion in revenues and $2 billion in profits.

Why worry, right?

But such was the animosity that Solutions engineers used Qualcomm phones. Qualcomm was Mobility’s biggest rival. And while the clan war erupted, in the background a mobile phone company worked hard to go digital.

That company’s name was NOKIA and it was unstoppable.

After becoming number one in mobile phone sales, it would remain there in one way or another there for 15 years.

So, Motorola was desperate, and the company brought in another Galvin, Chris, to help. But he ran into chaos.

Why The Motorola Space Project Didn't Work

People were obsessed with space in the 80’s. Communications was no exception and so, the Iridium project was born: a network of 77 satellites that would provide coverage where traditional technology couldn’t.

Motorola thought it was a great idea; it provided the technology to develop the satellites and money.

Lots of it.

We’re talking $2.6 BILLION.

And Iridium was big. Even Al Gore supported the idea. Well, he was KINDA big in the 90s.

But the project took ten years to launch. And when it did, in 1998, guess what happened?

It failed miserably. The phones used for Iridium each cost $3000. On top of that, every time you made a call, you had to pay $7 PER MINUTE. $7!

After a short, 9-month, lifespan, Iridium filed for bankruptcy. Desperate for anything, Motorola sold Iridium for bits and got back only 1% of the original investment.  

But Motorola was a giant. In 1999, it had 150 000 employees all over the world. So, it seemed to take the Iridium hit and still stand.

Iridium, however, would not be the only hurdle. 9-11 brought business to a halt, the SARS scare shut down markets and in 2001 alone, Motorola lost $4 BN.

Desperate for a solution, Galvin fired 56 000 employees, and focused on cost-cutting. But his efforts weren’t enough. In late 2003, he too was let go and months later, the Galvin family ditched the Motorola boat and sold its 3% share for $720 million.

The Galvins broke ways 80 years of history. But they ended up saving themselves.

Why Were Motorola Phones So Bad?

Galvin’s replacement, Ed Zander, entered a hornet’s nest when he took over for Motorola. There’s a legend that he cried on his first day. I would too, if I could see into the future.

But Zander saw potential in a sleek, elegant mobile phone called the RAZR. After a price adjustment, the RAZR became so popular, Motorola began to see a turnaround.  

It became the number 2 mobile phone company in the world and the Razr became one of history’s 20 best phones in the world.

But the RAZR’s successor wasn’t successful, even if Motorola had faith in it. With the lack of personnel and stagnant innovation, there was very little improvement. Other than cameras and more memory, it was STILL THE SAME PHONE.

Then, out of nowhere, instead of creating a brand-new phone, Motorola joined forces with Apple. That’s right, Zander and Jobs created the Motorola Rockr, which had Motorola’s hardware technology and Apple’s Itunes installed.

El teléfono no tuvo un gran éxito, pero es importante por la historia subyacente.

Al unir fuerzas, Motorola enseñó inadvertidamente a Apple cómo fabricar teléfonos. Y Apple ya era muy buena en la creación de software.

Así que, aunque Motorola estaba obsesionada con el RAZR, ayudó a Apple a crear el iPhone. Y ya sabes cómo funcionó.

ADEMÁS, los teléfonos de Corea y China estaban inundando el mercado.

¿Recuerdas cómo Motorola ayudó a China en los 80?

Bueno, después de que Galvin insistiera en China, Zander prácticamente ignoró a la nación en crecimiento. GRAN ERROR.

China estaba adoptando la 3G, pero Motorola se quedó con la tecnología 2G en un modelo antiguo como el RAZR.

Así que, en poco tiempo, los productos coreanos como Samsung y las marcas chinas como Huawei ofrecían 3G en teléfonos más baratos. Ambas naciones se apoderaron del mercado asiático y Motorola no pudo hacer mucho.

El propio Zander reconoce que Motorola no tenía dinero ni personal para cambiar adecuadamente hacia los teléfonos inteligentes. Las acciones de Motorola se desplomaron. Una caída brusca y Zander se culpa a sí mismo.

«Lo único que lamento es haber dejado el puesto de director ejecutivo y haber dirigido la división [de telefonía] [yo mismo] . », dijo en una entrevista con Chicago Mag.

De hecho, algunos expertos consideran que el tiempo que pasó Zander en Motorola fue un «hombre muy inteligente haciendo un trabajo terrible».

En 2008, ya no estaba. Y Motorola se quedó con muy poco en sus manos: no tenía un smartphone real, Apple se había llevado su tecnología sin dar nada a cambio y China y Corea crecían de forma exponencial.

Por lo tanto, buscaron inversiones. Entró Carl Icahn.

¿Qué le pasó a Motorola con Icahn?

Carl Icahn, un inversor muy agresivo, buscó obtener algo, CUALQUIER COSA con Motorola tras comprar el 3,6% de la empresa en 2007.

Pero las perspectivas no eran nada positivas: la empresa había pasado del 23% de cuota de mercado en el mercado de la telefonía móvil al 9,4% en cuestión de 2 años. La movilidad era una pérdida de dinero, pero no tenía una dirección real.

Y a Solutions no le fue mejor. ¿Recuerdas que mencioné el 11 de septiembre? Bueno, la tecnología de Motorola tuvo problemas durante los ataques, NO ESTÁ BIEN. Así que los socorristas cambiaron a otras compañías como Tyco, Northrop Grumman y Lockheed Martin.

En 2008, Motorola estaba desesperada, por lo que la junta directiva tenía un objetivo: «vender algo, cualquier cosa». Sin embargo, vender es difícil cuando nadie quiere tu producto.

Por eso Icahn presionó para dividir las dos divisiones principales en dos compañías separadas. Esto tardó TRES años en suceder y Mobility fue a parar a Google por 12.500 millones de dólares. ¿Fue mucho? Depende de a quién le preguntes.

Algunos dicen que era demasiado caro y que los productos de Google fueron un fracaso (como la tableta Motorola). Sí, había una tableta) Pero Google quería algo más: los cientos, si no miles, de patentes que tenía Motorola. Así que, después de conservarlas, Google vendió Motorola a Lenovo en 2014. El precio fue de solo 2.910 millones de dólares.

A Motorola no le fue bien con Lenovo. Sí, crearon el NUEVO Razr, que es una pantalla táctil plegable. Tiene un valor de 1500 dólares y a la gente no le gustó.  

Ok. Salió bien.

Lenovo admitió haber manejado mal la marca Motorola. Entonces, incluso después de la muerte de la marca, Motorola sigue siendo problemática. Por lo tanto, el regreso del antiguo gigante es muy difícil, especialmente en un mercado tan competitivo como el de los teléfonos inteligentes.

Y si bien a la división de Soluciones le va bien, como siempre, la movilidad parece llevar consigo demasiados fantasmas de una cultura que acabó matando. Una cultura que surgió desde dentro.