🥊 Why Motorola is the Ultimate Comeback Kid
ℹ️ This story shows that companies can reinvent themselves even when they seem to be on the brink of failure.
It's pretty wild to find out that Motorola built the communications system for the Apollo-11 mission. For many millennials, Motorola is a name that brings back memories. It reminds us of when our parents had early versions of cell phones or the sleek and stylish Moto Razr, one of the first foldable phones to hit the market. Or maybe it makes us think of a once-great phone brand that struggled to keep up with the fast-paced tech world and nearly faded away. Motorola isn't alone in this; many of us also remember brands like Ericsson, Nokia, Alcatel, and Siemens, which were big players before smartphones took over.
It's hard to believe that these brands were once at the top in a pre-smartphone era. But change is inevitable, and what rises often falls. The release of the iPhone in 2007 marked a turning point, kicking off a fierce competition between iOS and Android for market dominance. Companies like Motorola hesitated to adapt quickly and were eventually overshadowed by giants like Samsung and Apple, struggling to stay relevant.
I had almost forgotten about Motorola until I stumbled upon a YouTube video. So, what is Motorola up to these days? The same company that helped put a man on the moon and launched numerous groundbreaking telecommunication devices is now focusing on underground communications. This shift isn't as crazy as it sounds. After losing the mobile phone race, Motorola redirected its efforts into new business areas.
This story shows that companies can reinvent themselves even when they seem to be on the brink of failure.
🔮 A Personal Revelation
Contrary to what I thought, Motorola's stock didn't plummet after the rise of iOS and Android. In fact, Motorola's stock price is now around $370, a significant jump from just $14 in 2009, following the financial crisis. Motorola not only survived the smartphone wars but also thrived in the following years. How did they manage this? After some digging, I found out that Motorola split into two parts in 2011: Motorola Solutions and Motorola Mobility.
Motorola has a long history, starting with car radios in the 1930s, expanding to TVs in the '40s, and launching cell phones in the '80s. The company's diversification led to a breakup starting in 2008 to simplify its business for investors. This in fact, turned out to be a great decision for Motorola Solutions. The two subsidiaries have since taken very different routes.
Motorola Mobility focused on consumer products and struggled in the competitive smartphone market dominated by Apple and Samsung. Despite some popular models like the Moto X, Moto G, and Moto E, Motorola Mobility continued to lose money and was eventually sold to Lenovo in 2014 for $2.9 billion, a fraction of what Google had paid for it just 20 months earlier. As of 2024, Motorola Mobility is still struggling in the smartphone market.
On the other hand, Motorola Solutions, which focuses on enterprise and government communications equipment and services, thrived after the split. In 2023, Motorola Solutions reported record sales of nearly $10 billion, up 10% from the previous year. Their Q1 2024 revenue grew by 10% to $2.4 billion, surpassing expectations, and they raised their full-year revenue growth forecast to 7%.
So, the split allowed Motorola Solutions to excel in the enterprise sector, while Motorola Mobility faced ongoing challenges in the consumer market.
💡 A Lesson for the Ages
Motorola Solutions has become a significant player in public safety and enterprise security. This shows that sometimes it's wise to take a step back to move forward. By focusing on Solutions and selling off Mobility, Motorola taught some important lessons for other companies:
Focus on Core Competencies
By separating into two distinct entities, Motorola was able to focus each company on its core competencies and target markets.
Motorola Mobility could concentrate on consumer mobile devices, while Motorola Solutions focused on enterprise and government communications equipment.
This allowed both companies to be more agile and responsive to their respective industries' unique challenges and opportunities.
Enhance Operational Efficiency
The split enabled Motorola to streamline operations, reduce complexity, and eliminate redundancies within each business.
With a more focused structure, both Motorola Mobility and Motorola Solutions could optimize their processes, improve decision-making, and allocate resources more effectively.
Increase Strategic Flexibility
The split gave Motorola Mobility and Motorola Solutions more strategic flexibility to pursue their respective goals and make decisions tailored to their specific markets.
This allowed them to be more responsive to changing customer needs, competitive pressures, and technological advancements.
Unlock Shareholder Value
By separating into two focused companies, Motorola was able to unlock shareholder value that may have been obscured when the businesses were combined.
The market welcomed the split, with Motorola's shares rising 3.76% after the announcement.
🚀 Leveraging Competitive Advantages
Motorola Solutions' success is due to several competitive advantages:
Specialization in Public Safety and Enterprise Security: Motorola Solutions focuses on providing public safety and enterprise security solutions, with a large customer base and an integrated portfolio of software, services, and devices. This specialization allows them to tailor their offerings to meet the unique needs of these critical sectors.
Strong Track Record and Innovation: The company has a strong track record of revenue growth, profitability, cash flow generation, and shareholder value creation. With over 6,500 patents, Motorola Solutions demonstrates a commitment to innovation and staying at the forefront of technology in the public safety and security industry.
Global Leadership in Public Safety Solutions: Motorola Solutions is a global leader in public safety solutions, serving customers in over 100 countries across various sectors like government agencies, law enforcement, fire and rescue, and more. This extensive reach and leadership position give them a competitive edge in the market.
Diverse Product Portfolio: Motorola Solutions offers a range of solutions in Land Mobile Radio Communications, Video Security and Access Control, Command Center Software, and Managed Services. This diverse product portfolio allows them to address a wide range of safety and security challenges faced by their customers.
Addressable Market Opportunity: Motorola Solutions estimates its total addressable market to be over $60 billion, positioning the company for long-term growth and success. With leading positions in key segments like LMR Communications, Video Security and Access Control, and Command Center software, Motorola Solutions is well-positioned to capitalize on the growing demand for safety and security technologies.
Businesses can learn from Motorola's example. When faced with tough competition and market changes, focusing on core strengths, improving efficiency, increasing flexibility, and focusing on leveraging key competitive advantages can lead to a successful turnaround.