Inc Motorola - International Expansion And Diversification

INTERNATIONAL EXPANSION AND DIVERSIFICATION

Sales reached $300 million by 1960. International expansion efforts were initiated in 1961 with the establishment of an office in Japan. The firm's auto products division began producing alternators, a move which marked the beginning of Motorola's role as an auto industry electronics supplier. National Video and Motorola worked together in the mid-1960s to create the first rectangular picture tube for color televisions, a product that eventually became a standard in the color television industry. During the same period, Ford, RCA, and Motorola jointly developed the first eight-track tape player for automobiles. The falling cost of semiconductors fueled their increased use in consumer electronic products; to take advantage of the growing market, Motorola developed a line of low-cost, plastic encapsulated transistors. Other new product releases included a line of color receivers, a portable FM radio that was half the size and weight of previous radios, and the first all-transistor color television set sold in the U.S. International expansion continued.

Motorola began making components for battery powered quartz watches in 1972. As a result, the firm gained familiarity with integrated circuits, quartz crystals, and miniature motors. Two years later, Matsushita Electric Industrial Co. bought Motorola's television operations. Acquisitions during the late 1970s included data communications network systems maker Codex Corp. and communications equipment manufacturer Universal Data Systems. The firm also added advanced integrated circuits to all of its radio communications products. Making its first foray into the microprocessor industry, Motorola launched a 16-bit microprocessor in 1979; the new product was first used in electronic components for the auto industry.

Sales reached $3 billion in 1980. Motorola paid $253 million for computer system maker Four-Phase Systems, Inc. in 1982. Nippon Telegraph and Telephone ordered roughly 43,000 Pocket Bell pagers from Motorola that year. Four-Phase, Codex, and Universal Data were combined to form a new Information Systems division, which launched a 32-bit microprocessor in 1984. Motorola's paging division constructed a new plant in Boynton Beach, Florida; it also began transforming the devices from one-way receivers into two-way appliances able to handle various data formats. By then, the firm was also supplying cellular phone systems—technology it had first developed in the mid-1960s—to New York, Philadelphia, Beijing, and Hong Kong. As part of a major shift in focus, Motorola exited the car radio industry. The following year, Congress awarded the first Malcolm Baldridge National Quality Award to Motorola. The firm created Motorola Lighting Inc. to manufacture electronic ballasts for the lighting industry. It also unveiled the world's smallest cellular phone, the Micro-TAC, which became the industry's best selling product. Motorola's success in the cellular phone market was marred by its losses in computer systems, however, which reached roughly $200 million in the late 1980s.

Motorola created Iridium Inc. in 1991 to oversee a satellite communications system that allowed mobile telephones to operate worldwide; however, the unit's poor performance eventually cost the firm millions of dollars in writeoffs. Unisys Corp. and Motorola forged a semiconductor technology alliance in 1992. The firm also created Motorola-Nortel Communications in conjunction with Northern Telecom as a joint cellular network marketing venture. International expansion continued with new plants in China and India. In 1994, Motorola landed a contract to construct the first digital mobile phone system in Russia. The firm diversified into digital modems in 1995. The following year, the firm discovered that cable television lines could be used to offer Internet access to home computer users and began investigating ways to capitalize on this new market. Intense competition in the U.S. cellular telephone industry undercut sales, prompting the firm to lay off 225 employees. To bolster its cellular phone sales, the firm launched the StarTAC phone in 1996. Although the StarTAC was initially highly successful, digital technology had already begun to replace the analog technology that powered StarTAC, a fact that later earned Motorola sharp criticism from shareholders.

In the mid-1990s, Apple, IBM, and Motorola joined forces to create PowerPC, a microprocessor chip designed to compete with those manufactured and marketed by Intel Corp. However, PowerPC failed to penetrate the mainstream market. In 1997, Motorola established an Internet software division. By the late 1990s, semiconductor sales growth had ground to a near halt, and the firm's share of the U.S. cellular phone market fell to 41 percent from a high of 54 percent. Losses in 1998 totaled roughly $1 billion. In an effort to recapture lost market share, Motorola finally created a line of digital phones, known as the V-Series, in 1999. The firm also acquired Software Corporation of America, Inc. and the portion of wafer manufacturer Tohoku Semiconductor Corp. it did not already own.

In January of 2000, Motorola paid $17 billion for General Instrument Corp., which it folded into its newly established Motorola Broadband Communications Sector. The purchase gave Motorola access to General Instrument subsidiary Next Level—a high-speed Internet access provider—as well as to the alliances General Instrument had forged with TCI, the cable arm of AT&T Corp. Other acquisitions that year included network processor developer C-Port Corp., printer acceleration specialist WaveMark Technologies, Inc., and software development tools maker HI-WARE AG. The firm also divested its lighting unit. While sales of both personal communications devices and semiconductors declined that year, sales of cable modems and digital set-top boxes increased by roughly 50 percent. The broadband unit accounted for 8.4 percent of total revenues, a figure which Motorola planned to bolster in coming years.