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Bracketology 2: The Rise and Fall of a Technology Company

I recently wrote a blog, Acquisitions, Semiconductors, and Bracketology, about how mergers and acquisitions of companies will result in a single semiconductor corporation that includes every technology, be it digital, analog, or mixed-signal. To emphasize this point, I included a bracket for engineers to predict how the mergers will result in a company called BIG with a prediction of how many layoffs it would take.

The bracket theory can also be applied to other companies on a different scale. It can be used to show the rise and fall of a company in ways mainly focused on spinoffs of businesses rather than acquisitions. Still, acquisitions are taking place on a grand scale. This may help guide engineers as to what their fate is in the industry.

Hopefully in the end engineers will be saying, “The only thing that really changed was the logo on my badge.”

It is more likely they will be saying, “It’s not like the good old days.”

For our example, we will take two companies that rose into large corporations with many product lines only to spin them off and scale back to a limited number of businesses.

Motorola is a prime example of this trend. They started out in car radios and then police radios. They are now back to selling police radios having spun off or ended many of their other businesses. The Moto bracket is actually a funnel of technologies on the left that is filtered down to the spinoffs and remaining businesses to the right. It looks more like half a bracket converging and then diverging.

Motorola was once a giant that had electronics products which consumed 40% of its production of semiconductors. What started as a car radio business quickly transformed into a growing company that peaked in the 1990’s only to fall back to its roots recently. See this article. Moto, it seemed, was destined to set the pace for technology development as well as future trends. When CEO Bob Galvin went into China in 1992, the transition in technology development and careers began to follow. In addition to this shift, investments in doomed technology such as Iridium satellite phones drained resources and capital. Failure to recognize emerging technology such as digital communications and touch screens didn’t help. Motorola soon lost its edge and started spinning off businesses becoming a shell of its former self.

In a similar manner, HP also grew very large only to spin off and scale back. HP started out in test equipment and is now in printers, ink, displays, and computers. See this timeline article. What was once known as an engineering company with the tagline “Invent”, now has a front page that looks more like Spotify trying to solicit millennials. Along the way, test equipment, calculators, PDAs, and semiconductors came and went.

Several companies seem to be in the acquisition mode rather than spinning off businesses. These include Schneider Electric, General Electric, and Trimble.

What was interesting about the Schneider electric acquisitions was they didn’t promote the Schneider name at the time of the transfer.

I asked a recruiter about this and the response was, “We’ve only recently started using the global name of Schneider.”

Interesting. Why would that be?

General Electric once offered a huge product line that was diversified. When you look at the GE trend in acquisitions, there is a huge gap of almost twenty years from 1986 to 2004.

During my GE employment, the finger was pointed at CEO Jack Welch with a quote something like, “You’re either one or two or you get sold.”

This trend has been reversed of late as GE recently began to buy businesses again. The majority of these companies focus on technology. Also note that GE is involved in healthcare, one of the industries that seems to have a US-based future.

The longest list of acquisitions belongs to Trimble which also has a long timeline. Trimble was formed by ex-HP employees who recognized the future of technology in navigation. As GPS gets absorbed into phones the product opportunities are reduced. Trimble’s acquisitions seem to reflect what is left of the market as they pursue mining and agricultural equipment as well as navigation-related software companies. What I find most interesting is that Trimble also bought Google’s Sketchup software…..which isn’t mentioned on the acquisition time line.

These trends are often business-related; however, they do have some indications for analog as well as all engineers. Most of the trends show technology integration at a high level as products offer more and more features while charging less for the device. This indicates a spiraling cost as these functions are becoming expected building blocks that can’t command the prices they once did. Software on the other hand seems to be one area that has more value. Supply and demand dictate the market. It makes one wonder if hardware engineering is a discipline that will regain its value or even be worth pursuing as a major. See this article. That’s the subject for another blog.

References

  • Goodbye Moto, How Chicago’s Greatest Tech Company Fell to Earth
  • Motorola Milestones, Timely Achievements
  • HP website
  • Timeline of our History
  • Schneider Electric Acquisitions
  • General Electric Acquisitions
  • Trimble Acquisitions
  • About Trimble, Company History
  • Engineering by the Numbers by Brian L. Yoder, Ph.D.
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