After clamor from the markets for much of the year, Motorola CEO Ed Zander has finally announced his resignation, albeit remaining as chairman for the time being. He is to be replaced as CEO in January by the company’s president and COO Gregory Brown.
Zander left the post of COO of Sun to take over Schaumberg, Illinois-based Motorola in 2004. His exit from Sun saw a $2bn fall in its market cap and added a similar amount to Motorola’s when his appointment was announced. His first year at the helm also appeared to justify that market segment, marked as it was by spectacular success, thanks to what might be called the Razr effect.
The iconic, slimline phone caught the market’s imagination, sold by the bucket-load, and put Zander in the headlines as the man who had rescued Motorola and was preparing it for an assault on Nokia’s handset market leadership.
Three years on and Motorola has lost its momentum in the mobile phone space, falling to third place behind Samsung and flailing about in its operating system strategy for smart phones. First it abandoned Symbian and committed 100% to Linux as its main OS for that segment, with Windows Mobile only for business users, then earlier this year it bought into the UIQ business that develops user interfaces for Symbian phones.
The Razr has had no worthy successor, and in the meantime the company’s competitors have launched some compelling products of their own. In the developing world markets of China, India, and Brazil, Nokia has been able to boast that while both it and Motorola have reduced the bill of materials for ultra-low-cost phones, it has done it profitably, while Motorola hasn’t. There is also the impact of Apple’s entry into the fray with its iPhone.
On the infrastructure side, though Motorola is present in the cellular network equipment, WiMAX, and WiFi sectors, it is not a heavy hitter in any and lacks the clout or technological edge to set the agenda.
Its bottom line is also suffering. In January Zander had to announce plans to cut 3,500 jobs, or 5% of its workforce.
The statement put out by Motorola to mark Zander’s exit didn’t try to hide the backdrop to his move. He is quoted as saying: This is the right time for me to move on to the next phase in my life and spend more time with my family. The statement also made it clear that he will be staying on as chairman until the annual meeting of stockholders in May 2008.
Brown meanwhile comes to the top job at Motorola with previous experience as a CEO, having run network management software vendor Micromuse between 1999 and 2002.
Zander goes, but what does the future hold for Motorola? After all, its handsets have never been known for their intuitive UI, because engineers can’t do design as one cynic said recently. It is a jack of all trades on the equipment side, but a master of none, and there has been much consolidation in that space, so that it must face off against the Big Three of Nokia Siemens, Alcatel-Lucent, and Ericsson. The market will be expecting clear definition from Brown as to what he’ll keep and what he’ll shed, and how he intends to face the challenge of restoring Motorola at least to the number-two spot in cellphones.