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Marketing Techniques: Commercialization

In the 1990s, responding to concerns that cell phone coverage is spotty in various parts of the country, the Iridium telephone system by Motorola was created to solve that concern. This was a telephone that could be used in virtually any part of the world. Unlike conventional cell phones that rely on signals from cellular towers, the Iridium phone used a series of several dozen low-flying orbiting satellites that were stationary in the skies. Callers could access anyone at any time, and those with Iridium phones could also be accessed at any time.

This following is Motorola's initial press release when the system was being contemplated in 1990:
"Iridium is a worldwide digital, satellite-based, cellular personal communications system primarily intended to provide commercial, rural, mobile service via either handheld mobile or transportable user units, employing low-profile antennas, to millions of individual users throughout the world. The system includes a constellation of 77 small, smart satellites in low-earth orbit which are networked together as a switched digital communications system utilizing the principles of cellular diversity to provide continuous line-of-sight coverage from and to any point on the earth's surface, as well as all points within an altitude of about 100 miles.
Service will be available on a country-by-country switched basis as negotiated with the individual governments and/or the individual telephone companies. Unlike the terrestrial cellular telephone system (i.e., traditional cell phone service), Iridium is best suited for areas where the traffic density is low—sparsely populated areas, the oceans, and areas where personal communications is just emerging. In these emerging markets, Iridium can be used as a primer for the eventual terrestrial system."
Iridium eventually settled on 66 of those satellites. The concept was great - executives and others who always needed to be "in touch" had access to phone service. Whether one was fishing in the remote streams of Alaska or on an oil drilling platform in the Gulf of Mexico, the Iridium phone owner was always available and that important phone call could easily be made.
The telephone, depending on the model, cost as much as $3,000 and - depending on the package for which a subscriber signed up - the cost per minute of phone use ranged from $3 to
$7. Certainly a small investment when major decisions needed to be made and access to key
people was paramount. However, this is not something that would work for teenagers with the intent to call or text message friends.
Motorola's Iridium folded several years ago, leaving Motorola with a $5B write-off. Whereupon Iridium anticipated 500,000 subscribers, it barely reached 50,000. Saddled in debt and with a fleet of aging satellites in orbit, Motorola decided to scrub this venture.
Fast forward to the current calendar years. Go to Iridium Communications Inc. is the "new" Iridium. See what the company offers now. As you surf the web to learn more about Iridium's history, note the path the product has taken insofar as corporate ownership.

Answer the following questions:
Why do you suppose this Iridium product failed?
What do you think went wrong?
What did Motorola fail to consider as the product moved from concept to full commercialization?
What lessons relative to strategic planning have you learned from this case study?

Solution Preview

Why do you suppose this Iridium product failed?
The Iridium product failed because of the phone cost $3,000, the cost per minute ranged between $3 and $7 and the market for the phone was just business users and not regular consumers.

What do you think went wrong?
Motorola didn't think about the market and the number of consumers that would buy the phones and use the service. The growing market was regular consumers using ...

Solution Summary

The marketing techniques commercialization are determined. The lessons relative to strategic planning for learned from case study are determined.