10 reasons why Motorola failed

Warren Buffet once said that when a manager with a great turnaround reputation encounters a company with a reputation for dysfunctionality, it is the company that will keep its reputation.

Warren Buffet once said that when a manager with a great turnaround reputation encounters a company with a reputation for dysfunction, it is the company that will keep its reputation.

So it was with some sadness that I saw bow to investor Carl Icahn's demands that the company be split. Motorola Chairman Ed Zander dropped by the other day and the best thing I can say was he was still a bit shellshocked. Here is the company that invented the cell phone — in the fastest growing market in all of technology — getting clobbered.

So, sports fans, pick the reason that Motorola failed. Multiple answers are allowed.

1. Motorola missed the movement to 3G. Sure, it did — but remember its biggest customers, the U.S. carriers, didn't think they wanted 3G. So Motorola listened to its customers, when they should have been listening to its customers' customers.

2. Motorola was a stodgy Midwest company in a fast paced Silicon Valley world. There is probably some truth in this. The Razr was an aberration — a wild success. It is hard to have a fashion business inside an industrial firm. Today Nokia is moving into graphics-rich cell phone games while innovation from Motorol is giving you RAZR-lite retreads in puke colors. understands design; Motorola doesn't. Motorola's fashion sense only rivals New England Patriots' coach Bill Belichick's.

3. Motorola got out of the right business at the wrong time. Motorola at one time owned lots of spectrum, which it traded for equity in Nextel. So it starts every year with zero sales while firms such as own intellectual property worth billions, and and have millions of customers who will pay them $500/year. Motorola turned down a chance years ago to buy both Qualcomm and/or Nokia (for $20 million!).

4. Motorola just ran out of time. That's what every losing coach in history says. Doesn't fly. Maybe it had the wrong management but running out of time was not the problem. It did have a computer guy ( Zander) who had to learn the industry, but that could have been bridged. After all, what did Steve Jobs know about phones?

5. Motorola should have moved into content. This one might be true. Motorola led in set top boxes and IPTV. It should have jumped all over Tivo/Slingshot. It made a great acquisition with Symbol —and it understood content, but didn't carry the day.

6. Motorola stopped innovating. True. Do you carry a BlackBerry? A smartphone? Should Motorola have been a platform company, like is moving to? The Razr was the precursor to both the iPhone and the BlackBerry. By being late, it surrendered the high ground. It should have jumped on Palm. Plus, no one on the Motorola's senior management team ever sold a product to a consumer. It really doesn't sell licenses; it sells phones to teenage girls on Facebook.

7. Motorola didn't execute. Exactly so. Its customers — the wireless carriers — had a hate-hate relationship with Motorola, which did not deliver what it promised it would. Motorola never drank its own Kool-Aid; they never built the "seamless mobility" lifestyle among its various product groups. Can you see a way that consumers could have wanted to tie in their needs at home, at work, on their person and their auto? Sure you can. But Motorola could never bring these warring tribes together inside the firm. Face it — it communicated mainly by rumor.

8. Motorola didn't grow. In the past, unhappy stockholders would just sell their stock. Today, they moan and scream and force stupid actions. Motorola now has to go through gyrations which will make it easier for its competitors. Right now, no one wants to buy this division so it will be spun off to the stockholders. This looks like a very tough business to run. Turning a company with a downward spiral is the single hardest job in technology.

9. Motorola is a loose confederation of warring tribes. Of course it is. It is a company of 66,000 employees. But the warring tribes never coalesced. This was the problem that Zander tried to fix. Too little, too late. Game over.

10. Motorola never had the sense of urgency. Could be true. Everyone else moves at warp speed; Motorola jogged at its own pace, more like a monopolist than a paranoid competitor.

One of the benefits of capitalism is that it kills off those that are slow to innovate, slow to execute. But I feel somehow badly that the firm that invented cellular is now the walking wounded.

Copyright © 2008 IDG Communications, Inc.

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