From the Blog: Former Motorola Manager Sounds off on Emerson's Acquisition

The worst-kept acquisition secret of the year finally came public today: Emerson Network Power has announced it is acquiring the Motorola Embedded Communications Computing business. After months of rumbling, with Emerson, Silver Lake Partners, and IBM among the rumored suitors, Emerson steps up with $350M and takes the prize.

In the interest of full disclosure, I spent 14 years in sales and marketing at what was the Motorola Computer Group, and I’m now about 3 years removed. It’s been a long and arduous road from what was for many years the #1 vendor in VMEbus to what this business now becomes as part of Emerson.

I’ve been an advocate of spinning out this embedded piece from Motorola for years. Motorola is a mobile communications company. At best, the embedded computing business was an outpost, although in the heyday it was one of the highest gross margin businesses within Motorola. At worst, the folks in Chicago couldn’t spell ‘embedded’ at times. But after Motorola spun out Freescale, the handwriting was on the wall. This is a move Motorola needed to make - in fact, it was long overdue. Motorola shareholders should be applauding they got significant value out of this deal - more value than Intel got in selling it’s modular communication platform assets to RadiSys recently.

Because in recent years, this business stumbled, and it’s a shell of what it once was. My revenue goal as a marketing manager for the Motorola Computer Group in 1999 was $425 million, for just a part of the business. I moved on to manage the Internet strategy there for several years after that.

I have no idea what business school teaches managers to walk away from a #1 market share position - but that’s exactly what they did, declaring VME was all but dead in 2000 and not introducing new products for 3 years, then helping create the “VME Renaissance” for a couple years, then strangling that effort, then very recently trying to convince folks again VME wasn’t dead yet with one belated product introduction not supporting VXS or VPX. Walking away from VITA in 2007 just affirmed giving up the market leadership position.

And it wasn’t just VME this happened to. This is the group that bought Prolog, ditching STDbus lines without offering a replacement like 3U CompactPCI, and eventually flying Prolog’s leadership position in 6U CompactPCI into the ground. This is the group that bought Blue Wave Systems, a leader in voice processing - again, a position substantially frittered away. Finally, this is the group that bought Force Computers, putting two about-$350M companies with #1 and #2 market share in embedded computing and coming out the other end with what has been valued by today’s deal at … $350M.

I want to make sure my grandchildren never attend that b-school. You should, too.

But, let’s be fair. Objects in the rear view mirror may appear closer than they are. Let’s look out the windshield. Today’s acquisition is really about AdvancedTCA and MicroTCA, which they’ve been trying to create a focus around for several years and have a fairly good position in. And given the recent move by RadiSys, it’s a good competitive move for Emerson and should be a good addition to their business in that area (the former Artesyn). And it might solve a nagging problem Motorola had in selling to Nokia, Sony Ericsson, and others - the Motorola brand was hard to view as anything but a hostile competitor.

The question to watch: what happens when you put a $100M embedded business together with a business you just bought for $350M? Emerson shareholders should take note. Maybe the outcome will be better this time. But I can’t help but wonder how an embedded computing business buried inside of a business called “Network Power” will do, perhaps with similar problems a business buried within a huge mobile communications company with other more pressing problems had.

To my remaining friends in Tempe at Motorola … er, Emerson … congrats, good luck, and a wish for success.

To the management team at Emerson … those who don’t understand history may be doomed to repeat it. As the saying goes, you’ve got the job - now do something with it.