Why motorola iridium failed

Dow Jones. By Jon Gertner. To Read the Full Story. Subscribe Sign In. Imagine, moreover, that money is no object. Serving such exotic communication needs with no thought to cost was the fatal rationale behind Iridium, the pounds 3bn satellite-based mobile phone network, which filed for US bankruptcy protection on Friday.

Behind the failure lies a salutary tale that shows how a potentially revolutionary product was hamstrung by unrealistic planning, insufficient management control, bungled marketing and, most surprisingly, technological pigheadedness.

Iridium began as a pet project of Motorola executive Barry Bertinger and some engineers in the mids after the former's wife famously complained of not being able to phone the US while on holiday in the Caribbean. In Motorola's can-do engineering culture there was considerable attraction to the technological challenge involved in setting up Iridium's constellation of 66 satellites that would ring the world, allowing, in theory, phone calls to be transmitted and received from the furthest corners of the earth.

Iridium's first mistake was to build a stand-alone network in space. A call from an originating handset accesses the network at the nearest satellite, travels through space from satellite to satellite before beaming down to its destination on Earth.

Unsurprisingly, all that technology came at a stiff price. Iridium handsets cost pounds 1, and calls were as much as pounds 5 per minute. Worse still, the Iridium handsets were clunky, weighed about 1lb, and harkened back to Motorola's infamous brick phones, common a decade ago.

Those shortcomings proved fatal. Indeed, nine months after its highly publicised launch and a pounds 60m international marketing campaign, Iridium had managed to attract less than 20, customers compared with a guarantee of 52, specified in lending covenants with a syndicate of bankers that includes Barclays and Royal Bank of Scotland.

Though lots of new products fail to match early expectations, few, it seems, have failed with such an international bang. Insiders say Iridium's internal structure proved too cumbersome. Flight Today. History of Flight. Virtual Space. Like this article? Comment on this Story. Last Name. First Name. Cellular service was not as broadly available, but it was far less expensive.

Technology difficulties also made the service unpopular. Because Iridium's technology depended on line-of-sight between the phone antenna and the orbiting satellite, subscribers were unable to use the phone inside moving cars, inside buildings, and in many urban areas.