Motorola prepares to enter a new era

Motorola prepares to enter a new eraMotorola has gone through three reorganisations in less than two years as it seeks a focus for its business. Tom Foremski reports Motorola’s recent announcement of 15,000 layoffs and a major reorganisation to boost business is an attempt to correct pass mistakes. The company has gone through three reorganisations in less than two years, two for its chip division, as it seeks to find a focus for its business and move out of a stagnant period. Motorola has been hard hit by the Asian financial crisis which has hurt demand in wireless communications products and chip products but even before the Asian crisis it was struggling to find a new direction. In a recent speech, Motorola chairman Robert Galvin admitted that Motorola had missed the move toward digital wireless communications, it underestimated chip demand and so failed to build enough fabs in the early 1990s. “It’s a common problem, how much capital do you invest in an expensive fab and its not an easy decision,” comments Jim Turley, senior analyst at US market research firm MicroDesign Resources. “Motorola was completely blind sided by the move to digital, it was making so much money in analogue that it lost out to Nokia and Ericsson which benefited from the faster moving European market for digital,” says Will Strauss, head of market research firm Forward Concepts. “Motorola wont be able to regain its leadership in Europe but it still has a chance in Asia.” Motorola has blamed its chip business for much of its financial problems and this sector of its business will be key in its reorganisation. It’s new focus on the fast growing embedded systems market with several families of microprocessors will be a major factor in its ability to boost its business. “Motorola has made a lot of investments in embedded systems and while some may say it has too many microprocessor families, it reflects the different types of embedded applications that are out there,” says Turley. Bolstering its embedded systems efforts, is Motorola’s decision to takeover the running of the Somerset PowerPC design center from partner IBM, and refocus efforts on embedded applications. A major challenge for Motorola is to be able to support its embedded microprocessor families with software tools and technical staff, such as it newest microprocessor family Mcore, says Turley. “Motorola has produced some impressive new chip products, its modem chips and ADSL chips are among the best in the industry and it has an important joint venture with Lucent Technologies,” says Strauss. “Motorola is on the right track and I’m encouraged by the reorganisation.”


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