Iridium Failure

Motorola’s Iridium Project: Technological Triumph, Economic Failure

Iridium began as a pet project of Motorola executive Barry Bertinger and some engineers in the mid-1980s after Bertinger’s wife famously complained of not being able to phone the US while on holiday in the Caribbean. The idea was extended that Motorola would dominate the mobile phone industry by providing service from the north to south poles and everywhere in-between. To work properly, the system needed 66 satellites with 7 spares. After 11 years in development, the entire satellite fleet was launched, and service commenced in November 1998 (Finkelstein & Sanford, N.D.).

At the time of product launch, the Iridium project was hailed as a technological, logistical, and regulatory success, hailed as the “eighth wonder of the world” (Crockett, 2001). Motorola engineers overcame NASA-level technical problems, global politics and international regulatory challenges on all seven continents to turn the satellite phone system into an engineering marvel (Schieffer, 2005). The satellites were all launched and deployed in a record 12 months, 12 days (Windolph, 1997). Using an assembly line style process, Iridium was able to mass produce the satellites taking just weeks instead of the typical months to years to assemble. At its peak during the launch campaign in 1997 and 1998, Motorola produced a new satellite every 4.3 days, with the lead-time of a single satellite being 21 days (Mellow, 2004).

However, a mere year after this technological wonder was launched, Iridium filed for bankruptcy. The creation of this enormous system forced the company to default on $1.5 billion of debt (Finkelstein & Sanford, N.D.). The cost associated with the project had not been properly analyzed. Despite complete success in launches, the maintenance cost mounted in billions. The service had been such a failure that it only had 10,000 subscribers (Finkelstein & Sanford, N.D.). Motorola had severely...