Motorola 2007 Annual Report Download - page 22

transition and is making available 112 MHz of spectrum through auctions. Canada recently released a consultation
requesting industry input on making additional spectrum available for public safety use in the 700 MHz band. A
number of other countries around the world have also indicated their intention to pursue the availability of digital
dividend spectrum.
A global focus on enhancing security and “connecting the unconnected” is providing new opportunities for
Motorola’s wireless broadband and RFID products. In addition to offering products that operate in licensed
broadband, Motorola offers wireless broadband solutions that operate in bands where no license is required,
providing an economical means for enhancing connectivity in developing countries. Government funding to
enhance connectivity in African countries is fueling new opportunities for these products. Likewise, interest in
strengthening border security and global tracking and security of products provides greater opportunities for
Motorola’s RFID products.
In addition, some of our operations use substances regulated under various federal, state, local and
international laws governing the environment and worker health and safety, including those governing the
discharge of pollutants into the ground, air and water, the management and disposal of hazardous substances and
wastes and the cleanup of contaminated sites. Certain of our products are subject to various federal, state, local
and international laws governing chemical substances in electronic products.
Backlog
The segment’s backlog was $2.3 billion as of December 31, 2007, compared to $2.0 billion as of December 31,
2006. The 2007 order backlog is believed to be generally firm and approximately 74% of that amount is expected
to be recognized as revenue during 2008. The forward-looking estimate of the firmness of such orders is subject to
future events that may cause the amount recognized to change.
Intellectual Property Matters
Patent protection is extremely important to the segment’s operations. The segment has an extensive U.S. and
international portfolio of patents relating to its products, systems, technologies and manufacturing processes,
including recent research developments in scanning, information collection, network communications and network
management. We have also filed additional patent applications in the U.S. Patent and Trademark Office as well as
in foreign patent offices.
The segment licenses some of its patents to third parties and this revenue is not significant. Motorola is also
licensed to use certain patents owned by others. Royalty and licensing fees vary from year to year and are subject
to the terms of the agreements and sales volumes of the products subject to licenses.
We actively participate in the development of open standards for interoperable, mission-critical digital two-
way radio systems. We have published our technology and licensed patents to signatories of the industry’s two
primary memorandums of understanding defined by the Telecommunications Industry Association (“TIA”) Project
25 and European Telecommunications Standards Institute (“ETSI”) Terrestrial Trunked Radio (“TETRA”).
Notwithstanding the expiration of certain patents and the resulting potential for increased competition for
certain of our products in the future, we believe that our extensive patent portfolio will continue to provide us
with a competitive advantage. Furthermore, we believe we are not dependent upon a single patent, or a few
patents. Our success depends more upon our proprietary know-how, innovative skills, technical competence and
marketing abilities. In addition, because of changing technology, our present intention is not to rely primarily on
patents or other intellectual property rights to protect or establish our market position. However, the segment
continues to litigate against competitors to enforce its intellectual property rights in certain technologies and is
currently involved in several such lawsuits. Reference is made to the material under the heading “Other
Information” for information relating to patents and trademarks and research and development activities with
respect to this segment.
Inventory, Raw Materials, Right of Return and Seasonality
The segment’s practice is to carry reasonable amounts of inventory to meet customers’ delivery requirements
in a manner consistent with industry standards. The segment provides custom products which requires the stocking
of inventories and large varieties of piece parts and replacement parts in order to meet delivery and warranty
requirements. To the extent suppliers’ product life cycles are shorter than the segment’s, stocking of lifetime buy
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