How Motorola Lost Its Way

For years, Motorola Inc. had supplied virtually all the wireless phones to Ameritech Corp. But when it came time to switch to the new digital technology, something went haywire: Motorola wasn't ready. So in the summer of 1997, Ameritech rolled out its digital service using phones from rival Qualcomm Inc., a San Diego upstart. "I could not stop my strategy or my business plan and was forced to go with vendors that were ready," says Marc Barnett, Ameritech Cellular's director of product marketing.

An isolated case? If only. Instead, one of the world's most admired companies, known for cutting-edge technology and gold-plated quality, is coming up stunningly short these days. The former trailblazer in two-way radios, cell phones, pagers, and computer chips has missed a digital beat and now finds itself scrambling to catch up. Even then, its products don't always pass muster. In 1994, Motorola claimed 60% of the U.S. market in wireless phones, according to Herschel Shosteck Associates. Today, it has 34%.