Mini CASE: Motorola: An Analogue History Facing a Digital Revolution Read the Mini Case, analyze it and answer the following questions drawing from your knowledge of Corporate strategy. 1. Identify on a timeline between 1928 and 1998 the major events identified here. What does this analysis tell you about the reasons for the resistance of Motorola to new technology? 2. Given that Motorola had the technology and knew that the digital market was developing, explain why it persisted with analogue technology. 3. Highlight the key lessons emerging from this mini case which are relevant for Corporate strategistsMINI CASE: MOTOROLA: AN ANALOGUE HISTORY FACING A DIGITAL REVOLUTION The Hoses ofA rm 3' Success May In 1"er Be A t 'a use I\" if LS'r'rmegre Drift In 1994 Motorola had 60 per cent of the [15 mobile telephone market. Founded in 1928, it was known for its technological innovation. It introduced the two-way walkie-talkie radio device commonly used in the Second World War, it marketed the first television to sell for under 5200 in 1948. By the I950s it had developed capabilities in printed circuit, ceramic substrate technology and electronic system design. By the 197'0s it was a leading producer of microprocessors and was regarded as a world leader in technology. However, even in the early days it was evident that the emphasis was on technology, rather than the market. lCritics suggested that the firm put technology before consumers. Mobile phones had been developed by Bell Labs in the WEB. By the mid-19305 Motorola was the leading producer of cell phones using analogue technology, but none the less a logical progression from its military walkie-talkic systems using the post-war technology it had developed. However. these devices were bulky and expensive, targeted at business managers who were on the move and could not use landlines. The phones were not widely known or available. By the mid-l99llls Motorola was highly successful. From 1992 to l995 sales revenue grew at an average of 2'? per cent a year to reach $2Tbn and net income 58 per cent a year to reach $1.3bn. However, by the mid- I 9905 digital technology for mobile phones was being developed through what was known as the Personal Communication System (PCS). This technology overcame some of the shortcomings of analogue technology. It reduced interference. allowed security codes to be encrypted and could deal with more subscribers than analogue. It was a technology that supported mass market development. The demand for digital phones grew rapidly, not amongst businesspeople alone, but in a wider consumer market. These consumers were much less concerned about i'imctirmality and much more concerned about ease ofuse and aesthetic appeal. According to Motorola chief executive of the time, Robert Galvin. the company 'was at the forefront of the development of digital technology.' However. it chose to stay with analogue technology for many years, licensing its digital to Nokia and Ericsson through which it earned increasing royalties. Indeed, Motorola launched a new analogue phone. Star-TAG, and embarked on an aggressive marketing campaign to promote it. Not only was it clear from the growing royalties that digital phones were taking of, wireless carrier customers were lobbying Motorola to develop digital phones: 'Thcy told us we didn't know what we were talking about. .' These were not friendly conversations. But Motorola didn't do it. Instead. we launched with Ericsson. then Nokia.' By l998 Motorola's market share had dropped to 34- per cent and it was forced to lay oft-20.000 people. Questions I} Identify on a timeline between 1923 and 1993 the major events identied here. What does this analysis tell you about the reasons for the resistance of Motorola to new technology'.' 2} Given that Motorola had the technology and knew that the digital market was developing, give reasons as to why it persisted with analogue technology. Source: John-mm and Nd] aim (2603}