Failures – exposed, reflected, considered

Story of Iridium

with 9 comments

It all started one day in 1985 with a vision and commitment of one of Motorola’s brightest engineers, whose wife complained that she was unable to reach clients via her cell phone from the Bahamas. He envisioned a technology that would allow effortless communication from and to any corner of the earth. His name was Bary Bertiger. Bertiger submitted his idea to his superiors (who had rejected the concept, it was no less than Robert Galvin, Motorola’s chairman at the time, who gave Bertiger approval to go ahead with the project), gathered a star team of engineers and businessmen and started working on it. His idea was to put up a network of low orbiting satellites covering the entire orbit of the earth and linking them with mesh technology for routing calls to and from any point in the world.

Work on the project started in 1987. While satellite phones were available in the 1980s, they had limited global coverage and, owing to the height the satellites orbited, the transmission and receiving delay made a conversation sound as though speaking down a long tunnel. Motorola thought that the world was ready for something better, and proposed creating a massive network of satellites that would provide global coverage. These satellites would orbit at a much lower altitude than their competitors and so the quality of transmissions would improve dramatically. The initial cost of the project was estimated to be over A$7 billion and required to put 77 satellites into low earth orbit. Because of this number of satellites , the project was dubbed Iridium after element 77 in the periodic table of Mendeleev.

However, cost saving issues resulted in a proposed redesign of the project, reducing the number of satellites to 66 only. The marketers kept the name Iridium, instead of changing it to element 66 — dysprosium (from Greek “hard to get”).

The launch of satellites started early in 1997 and was completed by 1998 (from launching pads in Kazakhstan, China and America).

Iridium services commenced from December 1998. “Iridium’s core identity was defined by its transcendence of national borders, a structure that is particularly post-Cold War,” Wired magazine gushed in its October 1998 cover story. “Iridium may well serve as a first model of the 21st-century corporation.”

Unfortunately, despite the brilliance of the technology and the team behind its design and marketing, expectations had changed since 1987. People expected their phone to be lightweight, usable inside buildings and the calls to be relatively cheap. Iridium phones were heavy (not suitable for carrying in a pocket) — as they needed powerful batteries — and they didn’t work inside buildings, costing around A$10 per minute. In parallel, the demand, anticipated by the original Iridium creators, was slowly being met by a advent of portable mobile phones. 1G cellular telecoms have been launched by NET in Japan in 1979. However, the dawn of mobile phones came with the launch of 2G systems such as GSM in 1990s and still ubiquitous around the world. By then, the market for satellite phones was estimated at 2-3% of the mobile-phone market and there were other companies (Globalstar, ICO, and Ellipso) are chasing the same (satellite) customers.

Less than a year later, Wired News backtracked, saying, “After losing nearly US$1 billion in two disastrous quarters, the engineering marvel is in danger of becoming the Ford Edsel of the sky.”

At the cost of construction of A$7 billion, Iridium needed over one million subscribers to break even. By mid 1999 it had gained 55,000 subscribers and was rapidly running out of money. In August 1999, the Iridium was bankrupt and subscribers found themselves without a dial tone. There were several attempts at selling Iridium, but no company could afford it.

By early 2000 the only employees left at Iridium were those employed to ‘de-orbit’ the satellites (during the estimated period of two years).

In 2000, the company was taken over by Iridium Satellite LLC (for A$35 million), contracted by US Defence Department. In 2007, Iridium Satellite LLC announced that it would be launching new satellites to attract partners, providing services beyond voice calling such as a next-generation global positioning system, environmental monitoring and satellite photography, becoming fully operational by 2016.

It currently has 280,000 subscribers and counting, despite the fact that the phone requires a line-of-sight with a satellite and thus can’t work inside buildings.

Time will tell if its current incarnation is more successful than its first.

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Written by Hayk

October 1, 2008 at 10:00 am

9 Responses

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  1. I found your site on Google and read a few of your other entires. Nice Stuff. I’m looking forward to reading more from you.

    Eric Lee

    October 1, 2008 at 10:33 am

  2. This article explains the differences between the two kinds of marketing. Network Marketing

    Network Marketing

    October 1, 2008 at 10:51 am

  3. […] have this nice/cool product/service and will surely get customers/market share (Apple Newton, Motorola Iridium, and many of top dot-coms were built with this idealogy and resulted in […]

  4. I like your website and have a suggestion. Can we exchange links to our respective blogs on our blogroll.

    Please check out my blog and let me know. I have been blogging for a couple of years and have a sizeable number of posts.

    Our themes are related but not competitive.

    Naveen

    Naveen

    January 11, 2011 at 5:23 pm

  5. Hey Naveen,

    I checked your website and it looks interesting. We are indeed, as you are saying, not writing about overlapping things.

    I as you have been blogging since 2008, although times and again struggled to be regular in my posts.

    Let’s us try to have the link exchange and see how it goes.

    By the way, if you have any failure stories previously posted or you would like to post (or know someone who would like to post about a failure), please let me know so we can have it as a guest blog here on fail92fail.

    Waiting to hear from you.
    H.

    fail92fail

    January 12, 2011 at 10:08 pm

    • Hi H

      I added your website to my blog roll.
      Over to you now.

      I do have a failure story but I am sure you don’t want that to show up in your comments section!

      Thanks
      Naveen

      P.S – Please notify me know when you my website link to your blog roll

      Naveen

      January 19, 2011 at 12:54 am

      • Hi Naveen,

        Done.

        Waiting for your failure story.

        Cheers,
        H.

        fail92fail

        January 19, 2011 at 11:38 am

  6. I love the simplicity of your staff. But I wanted you to explain further whether the current GPS systems integrated into GSM phones derives its resources from the irriduim satellites.

    Kwabena Akomea-Agyin

    November 19, 2011 at 5:46 pm

  7. Thank You

    خرید vpn

    April 8, 2016 at 11:41 am


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