Any industry that converges with the Internet has seen its entire model be destroyed and rebuilt. Like a tidal wave, it crashes and levels the playing field. For many, this tsunami of change is a disaster, destroying those caught unprepared. But this so-called disruptive technology also serves to rise otherwise sinking ships, setting them in a new body of water in which their struggling vessels may thrive.
This latter scenario has proved beneficial to the many upstarts challenging the incumbents in the wireless industry. It also has been valuable to one once-struggling stalwart of the wireless industry-Motorola Inc.
Once upon a time, Motorola was on top of the world. It was the undisputed leader in wireless equipment, both infrastructure and handsets. But like Humpty Dumpty, Motorola had a big fall. It got caught unprepared for the digital phone revolution and lost much of its handset market share to rivals Nokia Corp. and L.M. Ericsson, from 51 percent in 1996, to 17 percent last year.
Critics accused Motorola of being arrogant and not partnering with others. Two years ago, analysts faulted the firm for not pursuing partnerships with third-party software developers and others.
“They have not done a good job of fostering a community of development,” said Strategy Analytic’s David Kerr at the time. “The issue is not so much hardware, but the software and services required to help operators get more revenue.”
How times have changed.
All the king’s horses and all the king’s men are busy putting Motorola back together again, and the framework for this new firm is the Internet-the center of Motorola’s strategy, not a leg of it.
“The big difference is the recognition that the Internet had to be the center of everything we did … A recognition that the move to digital, although difficult, is minor compared to the revolution we are into now,” said Janiece Webb, senior vice president and general manager of Motorola’s Personal Networks Group. “Everything Motorola makes will have some kind of browser in it.”
Although a 27-year Motorola veteran, Webb represents the company’s new school. The former assembly-line worker is now Motorola’s highest-ranking woman. Her surname is appropriate for the task she has been given-leading the company’s drive to convert Motorola to an Internet powerhouse.
“My entire assignment is to put the dot-com mentality in Motorola,” she said. “You’ve got to put agile teams together, put dot-com capabilities in a global brick-and-mortar firm. My organization is a fast-moving, dot-com style organization.”
Motorola PNG is charged with creating software solutions that will provide the “glue,” as Motorola puts it, behind the wireless Internet. This represents a shift by Motorola from a hardware-centric firm to one based on software.
The key areas of focus include Bluetooth, synchronization, user interface improvements, voice recognition and Wireless Application Protocol. The group is responsible for the iTAP keypad text entry technology, the Mobile Internet Exchange wireless Internet platform, the Mya voice-based personal assistant, TrueSync proprietary synchronization technology (gained through the acquisition of Starfish) and various other software and application development kits.
To do business the Internet way, Motorola first had to end its culture of warring tribes, in which the company’s different divisions competed with each other for customers and resources. As part of a massive restructuring effort started two years ago, that philosophy is over.
Motorola’s new rules of engagement dictate loyalty first to the customer, then to Motorola, then to the business unit.
“Just like the Internet,” Webb said. “You’ve got distributed communities, but you have to deliver together.”
Besides learning to play together, Motorola also is working to play better with others.
“This is a new Motorola,” Webb continued. “There’s not the arrogance of the past. A lot of people wondered if we lost our courage and our vision.”
But the vision remains, she insists. Just last month, Motorola announced it will host a series of application developer conferences worldwide for third-party wireless Internet application and content developers. The goal is to provide developers with insight into Motorola’s vision for the wireless Internet marketplace and help supply them with the tools and resources needed to begin developing for Motorola’s new devices and technologies.
“Developers are the ones who will make wireless Internet a true marketplace of the future,” Webb said. “When you put the Internet at the center of your thinking, you realize a couple of things. One is that everybody wants their content on a human being. They want people to access their content wherever they are, and no one company can be phenomenal at all these things.”
She said Motorola realized it must partner with third-party providers to gain access to all the applications needed to offer the greatest range of differentiation possible.
“The only way to aggressively get all that stuff, and differentiate, is to have robust software capabilities, and they don’t all have to be in-house,” she said. “We want to become intimate with the developers and have them come back over a period of time.”
Also, Webb has made deals with Amazon.com, Yahoo.com and America Online Inc., all of which now have bookmarks on Motorola Web phones. This makes it easier for operators to include links to their sites if they wish.
These moves have done much to change the tone of both technology and financial analysts.
Bear Stearns & Co. Inc.: “We forecast Motorola’s handset sales to grow more than 50 percent in 2000.”
Banc of America Securities L.L.C.: “In our opinion, Motorola is one step ahead of the two most important drivers of the industry: the coming of the Wireless Internet and the shift of wireless to the mass consumer market … Motorola should benefit from what we believe will be a large replacement market driven by upgrade to the Wireless Internet.
Solomon Smith Barney: “Motorola will be revamping 70 percent of its product line over the course of the year, while it also plans to double its production volumes. The inherent message behind this transition is the company does not plan to miss the move to data-enabled phones much like it missed the move to digital … We believe Motorola potentially could be entering 2001 with one of the strongest product portfolios for mobile data applications.”
Much of this is due to a recognition that software innovations are becoming an increasingly important card to play in the handset game.
“It makes sense to look outside the box for something to give them a leg up from their competitors,” said Dataquest’s Bryan Prohm, senior analyst covering wireless handsets. “There’s a new paradigm of what consumers will buy or not buy. In the past, it was size and battery life and screen size. Rising fast is the functionality, which is increasingly software based.”
Behind this paradigm shift is the Internet, which moves so fast that the only way to benefit from it is to be prepared for where it will be in the future, and wait.
“In general, the market is evolving at a rapid pace away from the voice-only type of device,” Prohm said. “Motorola missed the digital bus, so they’ve had to strive hard to catch up.”
“It’s disruptive for everybody,” Webb said. “We all have to deal with it. This means new challenges, quick trials, being agile. It’s like changing the wheels of a semi while it’s going 80 miles per hour down the freeway. We’re all in the same dilemma, and some are going to go faster than others.
“The war is just beginning, and it’s a brand new war.”
