Critical Analysis: Motorola
...path to next-generation networks that will enable them to offer innovative, revenue-generating applications and services to their customers. Integrated Electronic Systems Sector The Integrated Electronic Systems Sector (IESS) provides a broad range of embedded systems and products for the automotive, industrial, Telematics, telecommunications and portable energy systems markets. Personal Communications Sector The Personal Communications Sector (PCS) designs, manufactures, sells and services wireless subscriber and server equipment including: wireless handheld devices for cellular and iDEN integrated digital-enhanced networks, advanced messaging devices, personal two-way radios and a broad range of mobile data services, servers and software solutions, with related software and accessory products. Semiconductor Products Sector Motorola's Semiconductor Products Sector (SPS) creates DigitalDNA system-on- chip solutions for a connected world. Their strong focus on wireless communications and networking enables customers to develop smarter, simpler, safer and synchronized products for the person, work team, home and automobile. Research Question What factors have attributed to Motorola’s continued decline in market share and market dominance? Thesis Motorola Inc. has suffered a continuing decline in market share, sales, and market dominance due to a losses in its semiconductor sector, a distant connection with consumer needs when concerning cellular handsets , and poor leadership stemming from former CEO Christopher Galvin. Support When looking at Motorola current state and seeing the once powerful world leader in cell phones, semiconductors, broadband communications devices, its hard to imagine that the company is in such a bad condition. But due to a decade of poor decisions it has led to year after year of losses in profits and market share. In 2003, Motorola reported Q1 sales of $6 billion and net earnings of $169 million, representing a 2 percent year-over-year decrease in sales and compared to a net loss in the year-ago quarter of $449 million. While Motorola’s SPS division had been facing losses as early as 1997 its downturn can be attributed to in 2001 when the company decided to license its chip technology to out side firms including its rivals, and said it planned to shut down operations in Japan, Hong Kong and Texas. This event began the downfall of Motorola’s once strong SPS division. This let the edge that Motorola once had vanish as the playing field was leveled. Over the years as the losses mounted the company lost its number 2 spot in another space the semiconductor world-digital signal processors. In 2004, Agere Inc., which once occupied the number two position held by Motorola, edged out the Schaumberg, Ill. based company to once again be number two only behind Texas Instruments. As a direct effect of Motorola’s personal communications sector losses in sales and orders, thus the SPS division suffered a decline in revenue. "Since Motorola PCS (personal communications sector) buys 100 percent of its CDMA baseband chips from Qualcomm, that leaves mostly GSM/GPRS and iDEN chips that they order from SPS (Semiconductor Products Sector), so if the parent company's shipments are down in GSM/GPRS, that negatively affects SPS DSP revenues." (Omatseye 6) And now after years of trying to cut costs and downsizing, Motorola has decided to spin off its SPS division completely. The division will become Freescale Semiconductor Inc. In 1994, Motorola peaked on the FORTUNE 500 at No. 23. But it has since slipped to No. 61 on this year's list. If it had merely held its own for the past decade in two of the era's greatest growth markets, wireless phones and microprocessors, its star would have risen. But subtract the revenues from Motorola's semiconductor business, and the company will drop another 20-plus slots on the list. (Lashinsky and Rodriguez 52) As mentioned earlier, another market in which Motorola has floundered the opportunity to flourish is the cell phone market. Experts account Motorola’s inability to capitalize on one of the hottest markets today due to a distant relationship with consumers’ needs and wants. Another major deficancy in Motorola’s personal communications sector have to do with their extensive Research and Development department which spends roughly $4 billion annually which has numerous projects that never even see the light of day and only exists deep in the labs of Motorola. Motorola’s slide can also be attributed to when it failed to anticipate the worldwide shift to digital cell phones, and today Motorola sits at number four in the cell phone market, behind leader Nokia and Samsung, analyists have noted that not only have Motorola’s designs are lacking in comparison to the Scandinavian brands, but also in the area of the software not being as user friendly. “Their performance has been pretty depressing,” one technology watcher says. More recent flops have established Motorola as the big company that cant shoot straight. In the cell phone market Motorola has missed just about ever window that has been opened. When color screens became hot in 2002, Motorola couldn’t produce them in large volumes and didn’t penetrate the market until 2003, this allowed Samsung to come from seemingly nowhere to be...