The 'New' Motorola Solutions Is Taking On the Critical Need for Safety | At Barron's

Summary

In an interview with Andy Serwer, Greg Brown, CEO of Motorola Solutions, discusses the company's transformation from a mobile phone manufacturer to a leader in mission-critical communications, focusing on emergency services and private networks. Brown highlights their global leadership in private networks, 911 software, and video security. He attributes the company's success to strategic focus, new leadership, and smart acquisitions. Brown also addresses the impact of global security concerns, the importance of their technology in crisis situations, and the company's growth potential in a $66 billion addressable market.

Takeaways

• 📡 Motorola Solutions focuses on mission-critical communications, providing emergency radio systems for sectors like public safety, including police, fire, ambulance, and military.
• 🔐 The company specializes in private networks that remain operational during natural disasters or cellular congestion, ensuring reliable communication for emergency services.
• 🌐 Motorola Solutions is a global leader in private networks, with approximately 13,000 networks worldwide, offering encryption, security, and device refresh services.
• 🚔 They also provide 911 software solutions, managing emergency call handling, dispatch, and records in almost two-thirds of the 911 centers in North America.
• 📹 The company is involved in video security and access control, offering services for smart cities, enterprise security, and license plate recognition.
• 📈 Under Greg Brown's 17-year tenure as CEO, the company has grown significantly by focusing on mission-critical technologies and divesting from non-core areas like cell phones and cable TV set-top boxes.
• 💹 Motorola Solutions has a market cap of $64 billion and an addressable market of $66 billion, indicating substantial growth potential, especially with a strategy that excludes China.
• 🌟 The company's success is attributed to strategic decisions, focusing on public safety and security, and a commitment to superior products and operational excellence.
• 🤝 Motorola Solutions faces competition from Chinese firms like Hytera in radio communications and Hikvision and Dahua in video security, but maintains a strong position in the market.
• 🔋 The company is investing in organic growth, particularly in video and radio products, and expanding its sales force to capture opportunities in the growing public safety technology market.

Q & A

What is the primary focus of Motorola Solutions' business today?

The primary focus of Motorola Solutions is on emergency communications and mission-critical radio systems for public safety, including police, fire, ambulance, and military services. They also provide private networks that are always reliable and operational even during natural disasters or cellular congestion.

How does Motorola Solutions differentiate their radios from traditional 'walkie-talkies'?

While their products are sometimes referred to as 'walkie-talkies', Motorola Solutions emphasizes that their radios are much more sophisticated. They are designed for mission-critical communications, ensuring reliability and security, and are part of a broader system that Motorola Solutions installs, encrypts, secures, and maintains.

What role does Motorola Solutions play in the 911 software sector?

Motorola Solutions is a significant player in the 911 software sector, primarily in North America. They offer software for emergency workflow in 911 command centers, including call handling, CAD dispatch, and evidentiary management, with their software present in nearly two-thirds of the 911 centers in North America.

How does Motorola Solutions approach video security and access control?

Motorola Solutions offers video security and access control solutions for smart cities, physical security, and private security enterprises. This includes positioning cameras for security purposes and providing services like license plate recognition.

What has been the key to Motorola Solutions' success and growth under Greg Brown's leadership?

The success and growth of Motorola Solutions have been attributed to strategic decisions such as focusing on mission-critical communications and public safety, divesting from non-core areas like cell phones and cable TV set-top boxes, and investing in organic development and accretive acquisitions.

What is the addressable market size for Motorola Solutions, and how does it compare to their current revenue?

The addressable market for Motorola Solutions is $66 billion, not including China. Their revenue for 2024 is just under $11 billion, indicating significant room for growth within their target market.

How does Motorola Solutions compete against Chinese firms in international markets?

Motorola Solutions faces tough competition from Chinese firms like Hytera in radio communications and Hikvision and Dahua in video security. However, they are in the seventh year of litigation against Hytera for using their technology. Additionally, the U.S. and other Western democracies are increasingly cautious about using Chinese technology due to concerns over intellectual property theft and ties to the Communist Party.

What is Motorola Solutions' stance on the integration of 4G and 5G with their radio communications?

Motorola Solutions views the integration of 4G and 5G as an enhancement to their private radio communications. They have developed a new radio that combines private land mobile radio (LMR) with 4G or 5G, allowing for software programming over the air, improved location management, and seamless call handover to LTE networks.

How does Motorola Solutions ensure interoperability between different public safety agencies?

Motorola Solutions supports the P25 standard, which ensures interoperability between different radio systems and agencies. This standard allows any radio to work with any infrastructure and enables seamless communication between different public safety agencies.

What are some of the metrics Motorola Solutions uses to benchmark its business performance?

Motorola Solutions primarily uses Total Shareholder Return (TSR) as a key metric, focusing on how it compares to the market and peer groups. Other factors include superior product quality, operational excellence, revenue growth, margin and cash flow expansion, and strategic capital allocation.

What are the main opportunities and areas where Motorola Solutions is investing for future growth?

Motorola Solutions is investing in organic growth, particularly in video and radio product areas, as well as expanding its distribution and sales forces. They are also actively looking at acquisition opportunities that align strategically, financially, and culturally with the company.