iPhone and Samsung are the dominant players in the smartphone market with a market share of over 85% in 2022. Up until 2007, there were two companies that shipped millions of mobile phone units- Nokia and Motorola. Nowadays, Nokia has become the case study of how a pervasive bureaucracy can lead an empire to fall to its knees. But where is Motorola? Motorola was at the top of the tech industry in the early days of handheld phones and radios.
They pioneered new technologies, brought handheld phones, and even reached the moon with their transmitter. But within 2 decades, all of this progress went downhill. It feels like they just vanished out in thin air, and nobody kept track of them. If you’re one of them, then you’ll be surprised to know as of 2023, Motorola is doing better than many other big tech giants. So, why did they fall, and how did they manage to keep going strong after all these years?
Since the first telephone patent was granted to Alexander Graham Bell in 1876, inventors were trying to make the telephone easier to use. Back then telephones were too bulky to carry and too big to move around everywhere. Along with the limited dangling cables, lack of convenience and large bills for long distances made people wish for a cordless phone. When Martin Cooper demonstrated the first handheld mobile phone in 1973, it laid the foundation for what we now have in our hands. And the company that pioneered this is Motorola. From the late 90s to mid-2010, Motorola has gone through many ups and downs. Faced multiple billion-dollar megaproject failures, and gone through several bankruptcy and handovers, yet they are still doing business, which is surprising. To understand how Motorola keeps managing to rise up every time, we have to understand how this all started.
Motorola was started as Galvin Manufacturing Corporation by two brothers, Paul V., and Joseph E. Galvin. After buying a bankrupt battery company’s battery-eliminator plans and manufacturing equipment at auction for $750, Galvin Manufacturing Corporation set up a small shop and started producing battery eliminators. But technology was advancing too fast and soon Paul’s business became obsolete, due to the insurgence of radio technology.
Galvin saw this as an opportunity and started developing radio technology that could be installed in most vehicles. He wanted to rename this venture by linking the motor with the Victrola record player brand. And like this, Motor+Ola= Motorola was born! Galvin Manufacturing Corporation started selling Motorola car-radio receivers to police departments and municipalities in November 1930. Until 1943, Motorola was producing battery eliminators for radios, hand-held walkie-talkies, and cellular infrastructure equipment. When Motorola went public and became Motorola Inc. in 1947, its main business turned into producing and selling television and radios.
Motorola’s first television was the VT-71. The business was growing rapidly post World War 2. Knowing the opportunities, Motorola expanded its international subsidiary in Toronto, Canada. They were mass-producing televisions and radios there. In 1955, Motorola started a research and development laboratory in Phoenix, Arizona. They were trying to develop new solid-state technology, eventually introducing the world’s first commercial germanium-based transistor. This was also the year when the icon “Batwing” shaped logo was introduced as the Motorola symbol.
Motorola was venturing into space technology by this time. Working closely with NASA, they provided radio equipment for most of the space flights, and the first human to walk on the moon, Neil Armstrong delivered his monumental speech, “One small step for man, one giant leap for mankind” via the Motorola S-Band Transponder. This isn’t the only “FIRST” thing Motorola has achieved. In 1960 they introduced the world’s first 19-inch cordless television, then in 1963 developed the first rectangular color picture tube. And the first handheld portable telephone was also demonstrated by Motorola.
After a decade of work in cellular and technology, Motorola DynaTAC was the first handheld commercial phone in 1984. It changed the whole communication system and pioneered the way for modern smartphones that we today have in our hands. Up until this point, everything was working in favor of Motorola. The annual revenue skyrocketed, hired thousands of employees, and opened new shops and research centers across the globe. But this sweet phase didn’t last for very long and Motorola started struggling from the beginning of the 90s.
Motorola was making money left and right and started investing heavily into other ventures, just to explode other industries, other than television, radios, and handheld phones. These huge investments also generated a workplace for many people, at its peak, Motorola had 150,000 employees. But within 10 years this number was cut down to 50 thousand only. So, how did the situation change so drastically? Well, high ambition AKA too many investments into different ventures. Let’s dive into the most noteworthy investment that cost Motorola billions.
Iridium was a spin-off project of Motorola, created in the late 1990s. It was a global communication network system that used a set of 77 satellites. Motorola spent over $5 billion dollars to build the infrastructure and created a worldwide wireless phone service. You can think of it as Elon Musk’s SpaceX Starlink but for the 90s people. The project was designed in the mid-80s, and the executives of the project couldn’t predict what the world would be like in the next 15-20 years.
As the author, Rick Chapman wrote in his book “In Search of Stupidity”, “Unfortunately, the satellites spend 70 percent of their time over our planet’s oceans and are not usable for much of their life (unless perhaps you’re adrift in the middle of the Atlantic), the phones, while they may work from the top of Mount Everest, don’t work indoors, in the shadows of buildings or under trees. You would think an excellent company with entrepreneurial instincts would notice that 70% of the earth’s surface is water”, he further added. It was a massive failure and the entire company took the hit. So much so that they had to file for bankruptcy in 1999.
The Domino effects
Motorola couldn’t operate properly with the dip in their finances. During the Global recession of 2008, Motorola’s board of directors approved a split into two different publicly traded companies, and in 2011, the process was completed, giving birth to two new companies named Motorola Mobility and Motorola Solutions. Motorola Solutions was a direct successor of Motorola Inc. Under the mobility division Motorola released fan favorite Moto Razr, but this could save the company from crashing financially.
Within 7 months of the split, the Mobility division was sold to Google for $12.5 billion. At that time Google had faced several lawsuits regarding patent issues of smartphone technologies, and Motorola Mobility gave Google the upper hand in the patent issues. Google and Motorola further started an android modular phone project named “Project Ara”. But this project was another loss for Google, most of the big mobile companies didn’t support the idea and did everything in their power to restrict Project Ara from being released. And the lack of proper support led to this project being canceled.
Google and Motorola worked together on many other projects but couldn’t crack the market even a bit. In January 2014, Google sold Motorola Mobility to Lenovo for approximately $2.91 billion, which was almost $10 billion less than they’d spent to buy the company. Though Google kept ownership of the majority of Motorola’s patent portfolio, which helped them to eventually create their own android smartphone brand Pixel.
Any other company would’ve gone downhill, with these constant setbacks, but Motorola rose up from the ashes like the Phoenix. Lenovo knew how to handle business in smartphone divisions. They were on the lookout for a brand with which they could enter the global smartphone market. Lenovo got Motorola at a lower cost because the company was making losses. The acquisition was a good deal for Lenovo, as Motorola helped them to scale up their growth rate. As of December 2022, Motorola has the 3rd highest market share for USA smartphones with 4.92%. Considering the obstacles Motorola had to face for over two decades, this percentage is very promising and more than double what Google has in the market share. So, Lenovo’s purchasing decision was beneficial for Google, Motorola, and Lenovo themselves.
Honestly, Motorola can be a case study for how to get back up every time you fall. Business and entrepreneurship can’t solely rely on passion, you have to analyze the market and decide whether to invest and take the risk or not. Motorola had a humble beginning and it walked its way up to become a global tech giant. They’ve achieved many things and made history with their inventions.
Today we can’t think of our life without mobile phones, and this credit goes to Motorola for innovating at a time when nobody could even imagine such a thing. But being the first always has a risk factor and Motorola faced it in the worst way possible. But the company never lost its core value of constant innovation and adaptation accordingly. Motorola Solutions is currently doing good with a 12% profit margin in Q3 of 2022. So, never lose hope if you feel setbacks on your entrepreneurial journey, as Batman said, “Why do we fall? So that we can learn to pick ourselves up”.