Chicago Magazine Article on Motorola [telecom]

What Happened to Motorola

How a culture shift nearly doomed an iconic local company that once dominated the telecom industry.

By Ted C. Fishman

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- -- Paul W. Schleck

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Paul W.Schleck
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I started working at Motorola in 1989 as an engineer developing digital hardware. I work for Freescale now, having spun out of Motorola in

2004. I work in sales and support. My official record has me down for 25 years of service.

For many years I worked in the Cellular Infrastructure Group (CIG) before I switched to what was then the Semiconductor Products Sector ("SPS"). I can say that the author of this article hit the big points that I believe led to Motorola's downfall but he missed a lot of big details.

The big problems the author hit were the failure to move from the "warring tribes" culture to a more collaborative one in the 90's and the lack of visionary leadership that could led the engineering centric culture to drive markets rather than follow them. Certainly not easy tasks and if I'd known how to do that I'd be a very wealthy man.

This article highlights one of my major frustrations from my time wearing a Motorola badge: Cellphones captured all the attention. While certainly a big part of Motorola's business, SPS and CIG contributed significant revenue to the company. Many other sectors were important as well, such as Motorola Computer Group, the Government Radio Group and a group that made routers and network equipment whose name I forget. There were many others as well.

SPS in particular is a big miss by this author. Founded in the 50's, Motorola chips were (and are) a big part of the global semiconductor industry which started in the United States. Motorola was one of the early leaders in this industry. As Freescale, we are doing well and in many ways are better off without the connection to Motorola and the cellphone centric view investors took of that company.

Things I've seen in my time at Motorola:

o) I was working on Digital Cellular base stations when we were testing them with competitors phones. We had *zero* discussions with the Subscriber (cell phones) business. I spent more time talking to Qualcomm folks that people outside of CIG.

o) Motorola's purchase of General Instruments for $17B in 2000 was a visionary move that could have created a "Seamless" media experience across broadband and cellular. It never happened because the culture at GI was just as much a "warring tribe" as the rest of Motorola. Efforts to glue cellular and broadband together failed in part because the Motorola divisions didn't play together, the intrenched interests in the markets didn't want it, and there was no visionary strong enough to push through these barriers. "GI" was sold to Arris for $2.35B in 2012, quite a discount.

o) Semiconductor was treated as a completely separate business. SPS had to compete for business in the other sectors just like any other supplier. Sure, NDAs weren't needed and everyone wore the same badge, but at the end of the day no financial advantage was gained by having SPS in the same company. Meanwhile, competitors to Motorola's business wanted nothing to do with Motorola Semiconductors.

o) SPS's spinoff to Freescale Semiconductor in 2004 has turned out rather well. The biggest positive was the simple fact that investors viewed Motorola as a cell phone handset business first and foremost. Cell phones and chips are very different business that just couldn't be reconciled by the investment community. A separate company made it easy for investors to view the business properly. Another positive has been the fact that business that compete with Motorola no longer view Freescale as a competitor. For example, Scientific Atlanta wanted nothing to do with Motorola chips after the GI purchase.

Anyway, that's a few comments from my 25 years with this (these?) company. Get a beer or two in me and I'll tell you more!


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It's interesting to read this because IBM faced similar challenges several times over the decades.

In the early 1940s, IBM was strictly electro-mechanical equipment; no electronics. But then some of its engineers, who had electronics education, designed some electronic counters which caught the eye of Thomas J. Watson Sr, the CEO. This work evolved into the IBM 604 electronic calculator, a popular relatively inexpensive device in the 1950s, at a time when true computers were enormously expensive.

In the early 1950s IBM had to reorganize its product development and get away from the historic secrecy maintained by its inventors. Electronic engineering was done collaboratively, and a new lab was established for that.

In the late 1950s Tom Watson Jr ordered IBM engineers to use only solid-state devices for all new product development. This was a challenge because transistors were still new at the time and their working characteristics and manufacturing methods were not fully understood.

Over the following decades, several times IBM reorganized its pure research and product development efforts.

It was not easy for IBM to shift from the tabulating machine business to electronic computers, even though Watson Sr approved the fresh approach. In the early 1950s there were many who felt electronic computers were a very costly gamble, and IBM had more business than it could handle with tabulating machines.

Much later, IBM faced challenges evolving from a mainframe company to a server company.

Over the years, IBM sold off certain product lines that it originally invented, such as the disk drive.

Two books from MIT Press go into great detail, including internal technology details about IBM R&D efforts to develop its various lines of computers:

"IBM's Early Computers" by Charles J. Bashe, Lyle R. Johnson, John H. Palmer and Emerson W. Pugh, unfolds the challenges that IBM's research and development laboratories faced, the technological paths they chose, and how these choices affected the company and the computer industry. It chronicles the transformation of IBM into a computer company in a remarkably few years, discussing projects that ended in frustration as well as the more successful ones, and providing a sense of the atmosphere, the people, and the decision-making processes involved during the company's rapid technological transformation.

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"IBM's 360 and Early 370 Systems" by Emerson W. Pugh, Lyle R. Johnson and John H. Palmer tells how System/360's widely-copied architecture came into being and how IBM failed in an effort to replace it ten years later with a bold development effort called FS, the Future System. Along the way they detail the development of many computer innovations still in use, among them semiconductor memories, the cache, floppy disks, and Winchester disk files. They conclude by looking at issues involved in managing research and development and striving for product leadership.

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