Editor’s Note: Each year, the RCR Wireless News editorial staff chooses the person who has impacted the wireless industry the most during the past 12 months. This year’s choice is Motorola Inc.’s Ed Zander. Since the beginnings of the U.S. wireless industry, Motorola represented the best the industry had to offer. At its height, Motorola was often referred to as “the 800-pound gorilla.” But in the 1990s, the company faltered- and faltered again and again. It was no longer a towering threat. Indeed, some dismissed the company. In 2005, Ed Zander brought some heft back to the gorilla.
“Yeah!” barks Ed Zander, chief executive officer of Motorola Inc.-as if the question itself is utter nonsense. But along with his quick dismissal is a hint of excitement, a trace of enthusiasm for a challenge and an adventure.
The question: Will Motorola once again become the world’s No. 1 mobile-phone maker, a position Finland’s Nokia Corp. stole from the company in the late 1990s? Zander knows exactly what the answer is. He knows exactly where he wants to take Motorola.
And he’s not afraid to say it.
“Yeah!” he said. “You have to have scale; you have to be broad-based. Three-fourths of the world hasn’t even made a phone call yet. There’s just incredible opportunities there to get people connected.”
Ed Zander doesn’t act like most wireless executives. He doesn’t couch his answers in business jargon about “solutions” and “synergy.” While most CEOs lean on PowerPoint presentations and earnings-per-share ratios during analyst meetings, Zander demonstrates his company’s products and trades good-natured barbs with his executive team. He comes across as a straight shooter, a regular Joe sort of guy-one who just happens to make $6.1 million a year.
But behind the somewhat relaxed, agreeable demeanor is a man who kick-started the reinvention of one of America’s largest technology companies.
“He brought to the table a long-term vision,” said Ittai Kidron, wireless technology analyst with investment-banking firm CIBC World Markets Corp. Kidron does not own shares of Motorola. “He really turned everything upside down.”
The Motorola of today is vastly different from the Motorola Zander took over in December 2003.
Two years ago, Motorola was in the doldrums, to say the least. The company’s stock was at a 10-year low. Chris Galvin, the company’s longtime chief executive and a member of the family that had run Motorola for generations, had just resigned over strategic disagreements with Motorola’s board.
More importantly, Wall Street-as well as savvy consumers-saw Motorola as a sluggish, stuffy tech company that was past its prime. In mobile phones, which stand as the bulk of Motorola’s business, the company had been lambasted for missing the camera-phone surge. Indeed, Motorola had no camera phones, and precious few color-screen phones, to sell during the 2003 holiday shopping season-a time when rival vendors were rolling out a variety of color-screen, camera-enabled gadgets.
“It turned into a loser of a brand,” CIBC’s Kidron said.
That’s when Zander went to work.
“We’ve got our customers, which I think in some cases were either leaving us or in the process of leaving us-doubting whether we could develop or execute-and we gained back in some cases some of the confidence, and at least in other cases a willingness to work with us,” Zander said. “That’s a big effort.”
Zander started his turnaround with a look into the inner workings of Motorola. He made sure that different parts of the company began talking to each other, rather than working as independent entities.
“You had five different divisions all doing different things,” Kidron explained. “Sometimes you had two different (Motorola) divisions buying from one supplier at two different prices.”
Zander also embarked on a supply-chain reorganization, cutting the number of Motorola suppliers and reusing vendors across different businesses.
And perhaps most importantly, Zander helped boost Motorola’s energy-he gave the company a kick in the pants.
“The morale in Motorola had been very low,” Kidron explained. “He had to convince people within Motorola to think positively.”
“I like to win for my team,” Zander said.
A large part of Motorola’s newfound vigor comes from the massive success of the company’s Razr phone. The super-slim device has captured the wireless industry’s imagination, and helped complete the evolution of the mobile phone from a communications device into a fashion accessory. Motorola has sold more than 12 million Razrs during the past year and sales continue to remain strong-an anomaly in an industry where product lifetimes can sometimes be measured in weeks.
“It’s like any other hit product over the last 50 years-Sony Walkman or TiVo or iPods,” Zander said. “It was the right product at the right time for the right audience. It’s one of these things that comes along every 10 years. We did it once before (with the Motorola StarTac) and it took us 10 years to do it again.”
As a result, Motorola’s worldwide market share has jumped from around 13 percent in 2003 to almost 20 percent in the third quarter. Further, the company’s profits have been topping even the most optimistic forecasts; Motorola in the third quarter reported net earnings of $1.7 billion, way up from the $479 million it reported in the year-ago quarter. And Wall Street has noticed-Motorola’s stock has increased steadily from around $8 per share in 2003 to almost $25 per share this year.
The company’s successes have helped to improve Motorola’s image vastly.
“We believe Motorola is well positioned to benefit from macro industry trends, and, in particular, the expected building momentum in the replacement segment of the mobile handset market over the next two years,” wrote Maynard Um of UBS in a recent note to investors. The firm makes a market in Motorola securities.
“The one thing that is the most important is to reinvent the brand,” Kidron said. “It wasn’t a problem with technology; it was a problem with a deteriorating brand.”
“You gotta produce the financial results. We start there,” explained Zander. “That starts the ball rolling. Because at the end of the day, if you’re making your numbers or beating your numbers, that means people are buying your products.”
As Motorola’s business gains momentum, Zander said one of his long-term goals is to lift the Motorola batwings-the nickname for the company’s stylized “M” logo-onto the same level as Apple Computer Corp. or Nike Inc.
“It’s a dream. We think we got a great brand with that batwing,” he said. “That gets earned over many years. You have to demonstrate success, and the batwing has to become more than just, `Oh, they’re a cell-phone company.”‘ And, yeah, that’s the job of the marketing department and the branding department, is to try to capture that brand.
“Branding is an important part of our company.”
However, Motorola recently suffered a setback when Geoffrey Frost, the company’s head of marketing, died suddenly at age 56. Galvin brought Frost-a former Nike executive-on board in 1999, and he was one of the driving forces behind Motorola’s branding operations.
So how exactly does Zander plan to push the batwings, now without Frost? How does Motorola plan to overtake Nokia? Part of the strategy involves leveraging all of the parts of Motorola-from handsets to infrastructure to home networking.
“We’re one of the few companies that has a position both in the home and in wireless, that we can sit down with these companies and talk about where the future convergence is: How do you do the triple play? How do you get content off a cable network and onto mobile devices?” Zander said. “We have these different views of the world.”
Specifically, Zander mentioned such technologies as IPTV, dual-mode cellular/Wi-Fi devices, ad hoc networks and mesh networks.
“One area that I am very keen on is Wi-Fi or WiMax,” Zander said. “We call it Wi4 here at Motorola. I think it’s going to have a profound impact on communications and mobile communications.”
Another part of Zander’s strategy involves acquisitions.
“We’re very deliberate in how we look at these things,” he said. “We realize acquisitions are tough, even small ones. They don’t usually work very well-they never have in tech anywhere-big ones especially are very hard to go do.
“We’re not opposed to doing big acquisitions or any kind of acquisitions, we’re just not trigger happy. We just deliberate about doing the right ones.”
And a large part of Zander’s strategy rests in his own confidence in his leadership and his drive.
“I’m very driven to win,” he explained. “My job is to coach. My job is to lead. My job is to inspire. My job is to be passionate, to demonstrate courage and to get people to make decisions and to generate the playbook and put the right players on the field.
“If you work for me, it’s pretty black and white-there’s no grayness. You know where you stand, you know how you get measured, you know what success is. … If you like to rock and roll, and you like to win, and you like to measure success, you’ll enjoy working for me.”
