Calling Up Zander

Former Sun exec aims to charm customers for Motorola.

When Ed Zander takes the helm at Motorola Inc. this week, hell embark on a quest to prove that a man with no previous experience in the wireless industry can run the second-largest cell phone company in the world.

Most recently a managing director of equity fund Silver Lake Partners, Zander is best-known for his role at Sun Microsystems Inc., where he served as president and chief operating officer until June 2002.

The animated, fast-talking Zander succeeds the soft-spoken, reserved Christopher Galvin, grandson of Motorolas founder, Paul Galvin. Christopher Galvin resigned from the Schaumburg, Ill., company in September following a rocky three years in which the company laid off 60,000 employees.

Motorola President and COO Mike Zafirovski had been a favorite to succeed Galvin. In a conference call last month, Zafirovski acknowledged his disappointment but said he plans to stick with the company, and Zander made a point of keeping the mood light. "We will go to charm school and sit in the hot tub and figure out what we like about each other," Zander said. "The thing I like in Mike is that hes customer-driven; he likes to make things happen."

Observers say Zanders appointment makes sense. "The three-and-a-half years of Mike Z.s tenure resulted in some friction and departures within Motorolas phone group, and a charismatic outsider like Zander may be a more likely person to appease ... employees," said Albert Lin, an analyst at American Technology Research Inc., in San Francisco.

Zander also has experience with companies whose expertise goes beyond hardware. "It is reasonable to us that Zander was chosen for his software experience, an area [in which] Motorola has historically been weak," said Lin. "As phones become more complicated devices, the software and user interface become critical to success."

"My experience with CEOs is that technical expertise in a specific industry—i.e., cell phone technology—is not that important," said John Halamka, CIO of CareGroup Healthcare System, a Boston-area network of six hospitals. "Focusing on the core business, getting the basics right and establishing tight management controls generally lead to success."

On the other hand, even those who appointed Zander note that Motorola is a more complicated situation than Sun. In Zander, the board feels it has found someone "able to figure out the strategy of the future, execute to precision and inspire a team," said John Pepper, a Motorola director who headed the search committee. "We saw what he had done to build a complex company—admittedly not one having five different divisions."

Zander has never orchestrated a company turnaround, either, but he said thats not an issue. "I dont consider this a turnaround," Zander said. "Ive seen turnarounds, and I know turnarounds, and I dont consider this a turnaround."

Zander has no experience running a company that makes consumer-oriented products, let alone a cell phone business, the business that has been giving Motorola a negative image of late.

Motorola did post a profit last quarter and, to analysts delight, has followed industry advice to jettison its semiconductor business. But Motorola continues to be dogged by issues.

The company has been losing market share to leading cell phone maker Nokia Corp., which has a better reputation for innovative, user-friendly designs. And while some of Motorolas designs create customer demand, the company does not always deliver them on time. Last year, Motorola was late to market with large-screen cell phones. Motorola last month confirmed earlier predictions that its long-awaited V810 camera phone would not be ready in time for holiday sales. The cell phone units chief designer, Tim Parsey, left in September.

"We think the greatest challenge for Zander will be the consumer brand expertise required to remain No. 2," Lin said. "His tenure at Sun saw Java as the only consumerlike business, but Java has yet to deliver any financial benefit to Sun."

Some industry experts argue that Motorola just needs a chairman who understands the idea of user-friendly products. "Motorola is generally slow to market, their products are not user-friendly and theyve had an insular culture that needs to be brought closer to the customer," said Mark Lewis, North American president of Morgan Howard, an executive search company in Stamford, Conn., who knows Zander. "Most of the success that Nokia has had in the cell phone business ... is really a result of a successful enterprise strategy.