Innovations Examined: Iridium Satellite Phone Fails the Innovation Test
Last time I shared a mini historical lesson in how the light bulb met the three themes of innovation and added real value to the lives of customers and providers.
Now consider another invention—Motorola’s Iridium Satellite phones. In 1998, the company launched the services of Iridium phones 11 years after engineers developed the concept and accumulated 1,000 patents on the technologies behind them. The phone system offered reliable communications from anywhere in the world via a network of 66 low-Earth-orbiting satellites.
The Iridium system allowed worldwide voice and data communications using handheld satellite phones. The Iridium network boasted coverage for the whole earth, including poles, oceans and airways.
Before the launch, Iridium apparently screened over 200,000 people, interviewed more than 23,000 people from 42 countries, surveyed over 3,000 corporations and identified an attractive group of customers interested in the satellite phone solution. The Iridium analysts forecasted a very bright future, in hindsight based more on their confidence in the management team than a pure vetting of whether the new product would bring new ideas to life, and create great additional value for customers and providers.
Unfortunately, after spending over $5 billion a year later, Iridium filed for bankruptcy.
It goes without saying that the Iridium Satellite phone system brought many new ideas to life. Unfortunately, it failed to generate value for a large set of potential customers and, hence, value for Motorola.
While the satellite phone provided the benefit of placing calls conveniently from any location on our planet, it came at a very high cost and much harm—including a heavy and bulky phone and very poor reception when the phone wasn’t in line-of-site with a satellite. Then, the arrival of mobile phones and the spread of GSM enabled customers to find alternate ways for making wireless calls.
Needless to say, this innovation really wasn’t one. It didn’t satisfy the three themes of innovation.