Motorola 2011 Annual Report Download - page 8

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We offer an extensive portfolio of network infrastructure, devices, applications and services, based on
APCO 25 (Association for Public Safety Communications Officials), TETRA (terrestrial trunked radio), and DMR
(digital mobile radio) standards, as well as broadband technologies (Long-Term Evolution (“LTE”), and WiFi). Our
products and services are sold stand alone as well as part of an integrated system. In addition, we offer critical
applications in the public safety command center, including voice, computer aided dispatch and multimedia/video.
Our comprehensive service offering in this segment includes mobility consulting, system design and installation,
network and device management and product support.
Our Strategy
Our strategy in the Government segment is to partner with our customers to enable them to deliver reliable
services efficiently through innovative products and best-in-class services. Thought leadership and innovation are
core to the effective partnership with our customers. We deliver innovation by: (i) developing next-generation public
safety solutions including devices, Public Safety LTE systems, and critical command center applications; (ii) leading
the ongoing migration to digital products; (iii) managing the potential public/private convergence of 700MHz public
safety systems in the U.S. and digital dividend spectrum worldwide; (iv) continuing to be an industry leader in
APCO 25 and TETRA standards-based voice and data communication systems around the world; and (v) enhancing
our services offering through network and application integration. We continue to actively manage our product and
services portfolio, investing to expand into attractive and complementary segments to strengthen our customer
relationships.
Our Customers
We address the communication needs of government agencies, state and local public safety and first responder
agencies, and commercial and industrial customers. Our largest customer is the U.S. Government (through its
various branches and agencies, including the armed services), which represented approximately 11% of this
segment’s net sales, and 7% of the Company’s net sales in 2011. The loss of this customer could have a material
adverse effect on our 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 63% of this segment’s net sales in 2011.
We believe that there remain a large number of government and commercial customers globally who have yet
to experience the benefits of converged wireless communications, mobility and/or effectiveness and efficiencies
realized through applications enabled by mobile broadband. In addition to serving our existing customers, we
believe that we have opportunities to pursue profitable growth by extending our reach across new segments and
geographies.
Our sales model includes both direct-sales by our in-house sales force, which tends to focus on our largest
accounts, and sales through our channel partner program. Our channel partners include distributors, value added
resellers and independent software vendors. Resellers and distributors each have their own sales organizations that
complement and extend the reach of our sales force. With deep expertise about specific customers’ operations,
resellers are very effective in promoting sales of our product portfolio. The independent software vendors in our
channel partner program offer customized applications that meet specific needs in each segment we serve. We
believe this dual sales approach allows us to meet customer needs effectively, build strong, lasting relationships and
broaden our penetration across segments and geographies.
Our Competition
The markets in which we operate are highly competitive. Continued evolution in our industry and technology
shifts are creating opportunities for established and new competitors. Key competitive factors include product
performance; product features; product quality, availability and warranty; price; availability of vendor financing;
quality and availability of service; company reputation and financial strength, including investment grade rating;
partner community; and relationship with key customers. Our strong relationships with customers and partners,
technology leadership, breadth of portfolio, product performance and support position us well for success.
We experience widespread competition from a growing number of existing and new competitors, including:
large system integrators and manufacturers of private and public wireless network equipment and devices. Major
competitors include: Cassidian/EADS, Harris, Hytera, Kenwood, Sepura and Tait.