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Review of Operations
Communications
Sales rose 8% to $3.6 billion and orders increased 9%.
Sector
Order growth in the U.S. was led by radio common
carrier and federal government markets. Internationally,
orders grew most rapidly in the Asia-Pacific region.
Worldwide demand increased for trunked and secure
voice two-way radio systems and for paging products.
Operating profits were $225 million, down from
$302 million in 1989. The decline was due to:
• Increased research and development costs for a broad
mix of emerging opportunities in radio frequency (RF)
communications, as well as expansion of traditional
RF products. We believe these investments will
provide favorable returns.
• Continued development of the radio data communi-
cations business, which promises to rapidly augment
our voice and paging technologies. We intend to lead
in RF data communications, just as we have led in the
growing voice communications businesses.
• Expansion of international distribution channels to
meet the growing worldwide popularity of our prod-
..
ucts and services. We moved aggressively into new
markets as their window of opportunity opened.
We believe the potential, both short- and long-term,
is significant.
• Changes in our U.S. distribution organization,
historically one of our greatest strengths. This
resulted in notable changes and costs. It proved to
be more disruptive, in terms of distribution efficien-
cies, than expected.
• Certain functions in some of the sector's mix of
businesses suffered shortfalls in implementation and
efficiency. We missed certain performance goals, while
dealing with the heightened dynamics of the overall
business. We believe that these particular inadequacies
have been identified and are being resolved.
At the end of the year, the sector was divided into
the Land Mobile Products Sector and the Paging and
Telepoint Systems Group, to focus on the growth
potential of wireless communications technologies in
these businesses.
Morton L. Topfer, formerly senior vice president
and assistant general manager of the Communications
Sector, was promoted to president and general manager
of the new Land Mobile Products Sector, headquartered
in Schaumburg, 111. Robert L. Growney, formerly senior
vice president and general manager of the Radio
Technologies Group in the Communications Sector,
was promoted to general manager of the new Paging
and Telepoint Systems Group, headquartered in Boynton
Beach, Fla.
Land Mobile Products
The sector continued to invest heavily in technologies
of the future, such as Specialized Mobile Radio (SMR)
systems, wireless data communications and digital
trunking.
In SMRs, or shared systems, we made major progress
toward completion of our new CoveragePlus™ nationwide
voice and data communication and vehicle location
network in the U.S. More than 500 sites were installed
by the end of 1990. The system enables dispatchers to
locate and communicate directly with vehicles, by
voice or with data messages, anywhere in the network.
We introduced the 7100™ series of compact mobile radio
data terminals, which will be used on the network.
In Japan, we installed our first 1.5 gigahertz (GHz)
shared trunked radio system, called JSMR-II. The system
includes newly developed repeaters and subscriber
radios in the new frequency band. We began shipping
our first 1.5 GHz mobile radio, the MG-100, and the
800 MHz MIB-5000, the world's smallest trunked mobile
radios.
In China, new SMR systems were put in service in
Beijing and Shanghai. In Europe, a contract was awarded
in Switzerland for three systems that are to become
part of the country's first shared trunking network.
The German Postal and Telecommunications Ministry
awarded a contract for a pilot shared radio data network
for the Dusseldorf, Cologne and Bonn areas.
In radio data communications, ARDIS, our joint
venture with IBM, became operational nationwide.
By the end of the year, the radio data communications
service had delivered more than 250 million messages.
More than 30 customers were using ARDIS for applica-
tions such as field service, insurance claims, public
safety and transportation.
Motorola received a contract for KDT* hand-held
radio data terminals from United Parcel Service, for
use of the ARDIS network. UPS uses the terminals to
support its new On Call air pickup service.
The South Australia Police Department began
operating a Motorola high-speed portable-based police
data communications network, the largest system of
its kind in the world.
We introduced two modems that are compatible
with data networks such as ARDIS. The RPM 840
integrated portable radio data modem is complete with
standard industry interface protocols. The RPM 400i
modem can be integrated into products such as laptop
computers and other hand-held computing devices.
We re-entered the marine VHF radiotelephone market
with the introduction of the Radius* Triton II ship
station radios. The Radius line of two-way radios was
broadened with trunked mobiles for Canada and Latin
America. The Radius distribution network was expanded
with the addition of resellers in France and Germany,
and with shipments to Romania and Yugoslavia.
Paging and Telepoint Systems
Motorola entered the market for advanced second-
generation digital cordless telephones known as CT-2.
This technology provides users low-cost cordless
personal telephones that can be used in the office, at
home, or outside these areas through base stations
known as telepoints. They provide limited-range access
to the public switched telephone network.
We introduced a full line of CT-2 infrastructure and
subscriber equipment and began initial shipments to
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