Motorola 2010 Annual Report Download - page 12

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(v) continuing to be a market leader in APCO 25 and TETRA standards-based voice and data networking systems
around the world. We continue to actively manage our portfolio, investing to expand into attractive,
complementary markets, and divesting non-strategic businesses.
Our strategy for customers in our commercial enterprise market is to deliver the next generation of enterprise
mobility to empower the mobile worker, enable real-time asset visibility and engage the smart consumer. We have
defined several key areas of innovation, including advanced devices, enhanced information capture, adaptive
networking, integrated communications, advanced application services, the connected customer, security and
management. We expect to expand the range of devices to more workers so they are connected with a device that is
appropriate for their role, leading to enhanced productivity. By providing real-time asset visibility beyond just
merchandise, enterprises will be able to further monitor assets and activity and make decisions that increase
efficiency and lead to increased sales. To engage and connect with the smarter customer, next generation enterprise
mobility will need to continue to deliver products, systems and services that improve relationships and enhance
customer experiences.
Customers
Our sales model emphasizes both direct-sales by our in-house sales force and sales through PartnerEmpower,
our channel of independent and authorized distributors, dealers and value-added resellers, independent software
vendors, original equipment manufacturers and service operators. We believe this dual sales approach allows us to
meet customer needs effectively, build strong, lasting relationships and broaden our penetration across various
markets. Resellers and distributors each have their own sales organizations that complement and extend our sales
organization. With deep expertise about specific customers’ operations, resellers are very effective in promoting sales
of the Company’s products. Our independent software vendor and value-added resale channels offer customized
applications that meet specific needs in each market we serve.
Our largest customer is the U.S. Government (through its various branches and agencies, including the armed
services), which represented approximately 8% of the segment’s net sales in 2010. The loss of this customer could
have a material adverse effect on the Company’s revenue and earnings over several quarters, because some of our
contracts with the U.S. Government are long-term. All contracts with the U.S. Government are subject to
cancellation at the convenience of the U.S. Government. Net sales to customers in North America represented 58%
of the segment’s net sales in 2010.
Government contractors, including the Company, are routinely subjected to numerous audits and
investigations, which may be either civil or criminal in nature. The consequences of these audits and investigations
may include administrative action to suspend business dealings with the contractor and to exclude it from receiving
new business. In addition, the Company, like other contractors, reviews aspects of its government contracting
operations, and, where appropriate, takes corrective actions and makes voluntary disclosures to the U.S.
Government. These audits and investigations could adversely affect the Company’s ability to obtain new business
from the U.S. Government.
The Company believes that there remains a large number of businesses and governmental customers globally
who have yet to experience the benefits of converged wireless communications, mobility and the Internet. As the
worldwide economies, financial markets and business conditions improve, the Company expects to have new
opportunities to extend our brand, to market our products and services and to pursue profitable growth.
Competition
The markets in which we operate are highly competitive. Continued evolution in our industry and technological
migration is opening up the market to increased competition. Key competitive factors include technology offered;
price; availability of vendor financing; product and system performance; product features, quality, availability and
warranty; the quality and availability of service; company reputation; relationship with key customers; and
time-to-market. We believe we are uniquely positioned in the industry due to our strong customer relationships, our
technological leadership and capabilities and our comprehensive range of offerings.
We experience widespread competition from a growing number of new and existing competitors, including:
large system integrators, manufacturers of mobile computing devices and manufacturers of products in bar code
reading equipment and wireless networks. The segment provides communications and information systems
compliant with APCO 25, TETRA and DMR industry digital standards. Major competitors include: Cisco, EADS,
EF Johnson, Harris, Honeywell, Intermec and Kenwood.