Zander hits the «end call» button

Martin Garner
04 Dec 2007

Motorola announced on Friday that Ed Zander, Chairman and CEO, will hand over the CEO job on 1 January 2008 to President and COO Greg Brown. Zander will remain as Chairman until May 2008.

Ed Zander has had a roller-coaster ride at Motorola experiencing huge success and extreme failure within a very short period of each other. But his time as CEO will be remembered more for the failure than for the success.

When he first arrived at the company, it had had a huge hit with its StarTac phone but was struggling to follow it up and had been heavily hit by the downturn of 2001/2. But he said he was 'like a kid in a candy store' because of the large array of fascinating technologies and gadgets he discovered in the company.

Under his direction the RAZR was accelerated into the market and quickly established itself as a phenomenon becoming an instant and durable hit. Motorola did well to extend the success of the RAZR, bringing out a string of new versions and turning the RAZR into a wave, which the company rode until the end of last year.

At that point the RAZR was shown not to be quite the timeless classic Motorola had hoped it might become and sales fell sharply. Although the company had produced a number of cool designs alongside the RAZR, none was selling well enough to make up the difference.

Also this time last year Motorola got into a bruising price competition with Nokia in emerging markets, which left them unprofitable and facing the next quarter with channels full of unsold inventory.

There followed two quarters of carnage in which the company lost nearly 50% of its handset volumes, a speed of decline that shows just how brutal the handset market is. Following management changes and staff cuts the last set of results were a slight improvement, but still the consensus is that Motorola needs a stronger portfolio of handsets to recover.

In this sense Ed Zander leaves Motorola as he found it - trying to broaden out after failing to follow up a huge hit.

In parallel with the handset story Ed Zander has presided over the sale of the chipset and automotive businesses plus improvement in the fortunes at the home networks division, but he has failed to build the networks division back to adequate scale.

Earlier this year shareholder pressure on Zander became intense. Although Motorola has launched a number of new devices since then, it has relied heavily on refreshing old designs and there is not yet any sense of the 'new Motorola'.

The main challenges for Greg Brown are first to stabilize the company's market share, second to get it back to respectable profitability and third to establish a successful portfolio of handsets.

Martin Garner,mobile practice leader at Ovum

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