Its use process is: when a user on the ground uses a satellite mobile phone to make a phone call, the satellite over the area will first confirm the user's account number and location, and then automatically select the cheapest and nearest route to transmit the phone signal. If the user is in a sparsely populated area, the mobile phone will be directly transferred from the satellite to the destination; If it is near the terrestrial mobile telephone system (GSM or CDMA mobile communication system), the control system will use the network of the existing terrestrial mobile communication system to transmit telephone signals. At present, the GSM and CDMA terrestrial mobile communication systems we use are only suitable for densely populated areas, but they cannot be used in sparsely populated areas covering most of the earth. In other words, the market goal of Iridium project is to need mobile customers who can communicate by telephone anywhere in the world.
Iridium was snubbed.
However, such a high "technological content" will not last long. Iridium communication, which is expensive, met with a cold reception in the market, with a maximum of 55,000 users. It is estimated that it must be developed to 500,000 users to make a profit. Due to the huge R&D expenses and system construction expenses, Iridium Company bears a heavy debt burden. The whole iridium system costs more than 5 billion dollars, and the maintenance cost of optical system is as high as hundreds of millions of dollars every year. In addition to the investment provided by Motorola and other companies and the funds raised by issuing stocks, Iridium also borrowed about $3 billion in debt, and the monthly interest on the debt alone reached more than $40 million. Iridium Company has never caught its breath from the beginning, and has been negotiating debt restructuring with creditor groups composed of banks and bondholders, but the two sides failed to reach an agreement. 1August 3, 999, the creditor group filed an application with the federal court of new york to force Iridium Company to go bankrupt and reorganize. In addition, Iridium Company was forced to file for bankruptcy protection on the same day because it was unable to pay the interest on the $90 million bonds due two days later. On March 18, 2000, Iridium Company went bankrupt, with debts exceeding $4 billion. Last night, the stars were bright, but now they have become a beautiful meteor. Iridium came back to life on 200 1, and the US military was his main customer.
Analysis of iridium in cold
The technological progress of iridium satellite system is in the leading position in the current satellite communication system. Iridium system satellites can transmit information directly through the interstellar link, which enables users of Iridium system to communicate directly without relying on the ground network, but it also causes high risk and high cost of the system, and the maintenance cost is much higher than that of the ground. The maintenance cost of the whole satellite system will cost hundreds of millions of dollars a year. From the market point of view, Motorola did not make a serious market analysis when it started the Iridium program. When most cities, suburban villages, traffic trunk lines and tourist attractions are covered by the ground network, and when the international roaming of mobile phones becomes possible, the market of satellite mobile phones is undoubtedly being continuously compressed, and the scale of user groups is correspondingly reduced. Terrestrial mobile phone network has considerable advantages in the cost and portability of mobile phones. Therefore, the feasible scheme before 10 lost its foundation after 10. After 10 years, the user groups that existed before 10 years have been unable to reach the minimum scale to support business operations. Without the market, there is no income and no ability to control one's own destiny. Moreover, the global open communication market is far from being formed, which makes Iridium unable to explore the global market. No one can deny the high-tech content of Iridium, but this century-end science and technology fairy tale woven by 66 high-tech satellites has positioned itself as "aristocratic technology" at the beginning of commercial use. Iridium phones cost as much as $3,000 each, plus high call charges. In the first two quarters, it developed 654.38+million users in the world alone, which made the loss of Iridium Company in the first two quarters reach 1 billion dollars. Although Iridium mobile phones later reduced their charges, they still failed to reverse the trend. Edward Teano, the former president of the company, made a series of mistakes in marketing and operation, such as failing to supply Iridium phones to retailers when the Iridium system was put into commercial operation, which also made it lose many users. It is said that the company's plan is to reach 6,543,800 users in China initially, but the fact is that it is less than 654.38+ 0,000 users. The decision to put iridium satellite system into commercial service in June1998165438+1October was "devastating". Limited by investors and signed contracts, Iridium system was put into commercial use in a hurry under the pressure of schedule when the system itself was not perfect. The first impression left by low-quality service to users is disastrous for Iridium Company. Users generally report that Iridium mobile phone communication is unstable. Therefore, this image has seriously hindered the expansion and consolidation of its market. When Iridium Company declared bankruptcy protection in March 2000, Iridium Company only had more than 20,000 customers. Iridium system can be said to have brought epoch-making changes to the history of human communication. It adopts advanced satellite processing and interstellar link technology, which is equivalent to reversing the ground cellular network in the air, and users can communicate directly without relying on the ground network. This kind of satellite communication breaks through the limitation of geographical location. No matter in the barren desert or in the rough sea, from the North Pole to the South Pole, you can connect with any other phone by dialing a satellite phone. Compared with cellular telephone, iridium satellite telephone has more obvious advantages in special environment and special circumstances. Another advanced point lies in its wide coverage, which can provide seamless mobile communication anywhere in the world and solve the problem of cross-protocol roaming between satellite network and terrestrial cellular network, thus realizing the handheld communication terminal and the globalization of personal communication.
Defects of Iridium Communication Technology
1 iridium phone can't get a signal in the building.
First, the iridium telephone can't receive signals in buildings, which is its most important defect. Imagine car owners who can afford iridium phones. If they want to use them indoors or in the car, they must have an external antenna or run out. Who will accept it? In fact, some interested investors discovered this problem very early. According to the senior manager of a local Bell company, they were stunned by a slide when they watched Motorola's iridium demonstration in the early 1990s. They say that the flexibility of users is the most important prerequisite for using this service. In other words, users must first put themselves in a place where there is no obstacle between the telephone antenna and the satellite, in order to use the telephone smoothly; Otherwise, the phone will not be connected. "Now tell me, how can I sell this thing?" He said. Therefore, his company finally refused to invest in the iridium project.
Iridium telephone is too heavy to use.
Second, Iridium mobile phone is too big to use and needs special training. Motorola's Iridium dual-mode mobile phone weighs about 454 grams, and Kyocera's Iridium single-mode and dual-mode mobile phones both weigh 400 grams, which is much larger than GSM mobile phones weighing less than 100 grams, and it is not convenient to use. And it needs special training before use. Every phone must be equipped with a complete backpack accessory, and the actual function of each accessory is often puzzling.
3 high conversion cost
Thirdly, the iridium satellite system is connected with the cellular telephone network, which must adapt to different regional transmission standards, and the resulting conversion cost brings great inconvenience to users. When roaming around the world, in order to connect to the local cellular telephone network, dual-mode mobile phones need to replace calling cards suitable for local regional transmission standards. For example, if a European user goes to the United States and Japan on business, he needs to buy three calling cards to match the transmission technical standards in these three regions. The price of each card is about 660-900 dollars.
4 voice quality and transmission speed are not ideal
Fourthly, in terms of voice quality and transmission speed, Iridium telephone lags far behind cellular telephone. The voice quality of MF-TDMA (Multi-frequency Time Division Multiple Access) communication system adopted by Iridium is not as good as that of CDMA (Code Division Multiple Access). In addition, the data transmission rate of Iridium satellite system is only 2.4kbps, so it can only transmit short emails or slow faxes besides making phone calls, which can't meet the needs of the current Internet. However, the data transmission rate of GSM system can reach 64kbps this year, which coincides with the speed requirement of information transmission in today's Internet, making iridium telephone far behind. Then, how much role did the technical defects of iridium system play in the bankruptcy process of the company, and is it the root cause? The answer is no, mobile phones are also technically flawed. Isn't it becoming more and more popular? On the other hand, even if Iridium mobile phone has no technical defects, it is doomed to fail if it is not favored by users and the market. High-tech products should follow the law of technological development. Technological progress can only be a necessary condition for product marketization.
Cause analysis of company bankruptcy
Not ready
Iridium system was officially put into the market without adequate preparation, and the corresponding services could not keep up, which caused adverse effects among consumers and suppressed many potential consumer demands. Iridium system was hastily put into production under the pressure of construction period, and the first problem exposed was that the supply was in short supply. There are two companies that produce iridium satellite phones: Motorola in the United States and Kyocera in Japan. However, the latter failed to put into commercial production in time because of the high call failure rate due to technical problems. Motorola's mobile phones also have problems such as insufficient production and poor sales channels. Motorola's factory in schaumburg produces 65,438+0,000 iridium mobile phones every day. It is usually sent to 12 iridium portals distributed all over the world, and then handed over to partners and service providers in various countries, so it takes time to reach users. It is reported that a British user ordered an iridium phone at the beginning of the operation of the iridium system, but it took half a year to arrive. The delay in delivery caused Iridium Company to lose many users. Secondly, due to lack of preparation, the dropping rate of Iridium telephone remains high, which makes many consumers flinch. 1998165438+10, the dropped call rate of iridium satellite system reached 15% in the initial operation, mainly due to poor software, and it was often "disconnected" when switching from one satellite to another. After the improvement, the dropped call rate dropped to 8%, but it is still very high. However, some people think that insufficient preparation and improper market timing cannot constitute the main reasons for Iridium's failure.
Improper timing
First, the development cycle of iridium satellite system itself is quite long. If we can't shorten the process of commodity marketization, we may miss market opportunities. Because, in the rapidly changing market, competitors will introduce alternative products at any time, while consumers are more inclined to be preconceived and catch up with the latest trends, and no one will retain their loyalty to a high-tech product in the future. Second, from the perspective of production and technology, on the one hand, high-tech products will be restricted by the development law of technology itself; On the other hand, production standards are constantly changing, and it is basically impossible to produce perfect products. The actual practice is often to make samples first, then constantly revise and improve them, and finally let the products mature. Such examples are not uncommon in life. For example, Lenovo and Great Wall, well-known domestic PC manufacturers, realize that a certain function will be welcomed by the market at a certain period, but it is difficult for them to make it perfect in a short time. They often take such measures: speed up the R&D process, launch large-scale market promotion, first promote products with incomplete technology in a small scale in the regional market, and take the lead in occupying the market; Then, products with mature technology are developed and pushed to the national market, and at the same time, new products with certain compensation are exchanged from consumers for early products. And this practice of "being born after death" is mostly successful. Even though Iridium system can provide high-quality services after repeated testing and full preparation, it still cannot achieve the expected benefits due to the narrow market segment and limited customer base. Faced with a huge debt of $4.4 billion, Iridium has not yet fallen. Therefore, market timing is not the key to the bankruptcy of Iridium Company.
The financial crisis is just a symptom.
From the official announcement of Iridium Company's operation to the filing for bankruptcy protection, the accumulated liabilities in more than half a year reached 4.4 billion US dollars, accounting for 80% of the total investment. The debt crisis became the fuse of Iridium bankruptcy. The main reason for this situation is that Motorola's CFO exaggerates the cash flow generated by Iridium project's own operating activities and ignores the excessive debt risk. Before bankruptcy, Iridium's interest-bearing debt ratio (the ratio of interest-bearing debt to capital) was as high as 400%. As a result, the whole project lacks cash flow support of venture capital. It is not surprising that there is insolvency in the end. However, the financial crisis is only the shallowest one in a series of crises, not the main cause of failure. Imagine, if the debt ratio was not so high and venture capital had enough liquidity, Iridium would not have closed down so early. However, as long as its products are not recognized by most users and cannot create the expected profits, Iridium is still difficult to avoid the fate of falling down.
Problems brought by the partner system
1996, Iridium was approved by the Federal Communications Commission, and an international supporter team raised $2 billion from Iridium Company, overcoming various technical challenges in satellite upgrading. The basic organizational structure of the company is a consortium, which consists of global 15 regional gateways. The so-called gateway is the signal transmission system on the ground, which can send and receive iridium telephone signals. However, it is this partnership system that brings many problems. First of all, Iridium's international structure makes it impossible to manage effectively. The 28 members of the board of directors can speak many languages. Every meeting is like attending a small United Nations meeting. Everyone must wear earplugs and listen to simultaneous translation in five languages. The sales and service of Iridium telephone are operated by turnstiles all over the country. The owners of these gates are all members of the board of directors. For Iridium headquarters, it is impossible to put too much pressure on each gate. Its management difficulty can be imagined. Even Mr Stano, CEO of Iridium Company at that time (he worked in Motorola for 23 years and played an important role in mobile telephone service) felt difficult to manage and was pessimistic about Iridium Company. He once said, "The existing structure has no hope of success." Secondly, the partnership system makes it difficult for Iridium Company to form a unified plan and the marketing channels are not smooth. As early as the beginning of 1998, many Iridium insiders began to worry that scattered partners could not establish a unified and effective marketing offensive. Under the framework of Iridium, the regional gateway is responsible for marketing Iridium's telephones and services in the region. Iridium intends to provide pre-sales service a few months before organizing the global marketing offensive, so as to have at least a basic customer base. However, the pre-sale work was not completed. Iridium's partners have not established a sales team, designed a marketing plan, or at least opened up distribution channels in the region. With the large-scale advertising of Iridium in full swing, it has attracted many people's attention. In the first few weeks, more than 6,543,800 consultation calls flooded into the Iridium sales department, and then were transferred to local partners. But as a result, many callers were soon disappointed. Without enough marketing channels and enough sales staff, most partners can't handle these consultations, and the result is quickly left out in the cold. Is the defect of company management system and poor marketing the key to Iridium bankruptcy? We think not. Back to the previous mode of thinking, if Iridium adopts the shareholding system and can formulate a unified and effective marketing strategy, it still cannot match the sharp contrast between products and the market and cannot stop the disillusionment of this scientific myth.
Noble products and civilian market
Iridium satellite is the most advanced of several LEO satellite communication systems at present. The key equipment of the communication system, the switch, is placed on the satellite, which enables users to communicate directly without relying on the ground network, but it also causes high system risk and high cost, and the maintenance cost is much higher than that of the ground exchange. Iridium Company has positioned its main users as "advanced international business travelers". And mistakenly believe that as long as the technology is advanced, the price will not become an obstacle, and people are willing to pay a slightly higher price for "a number connecting the world". They call their users "a group of people who pay without looking at the bill." The huge investment of $5.7 billion, market misjudgment, and many shareholders' doubts about Iridium's small satellite phone.
Quick success and instant benefit have created such a noble product. In fact, iridium telephone is not only expensive, but also the retail price varies greatly from place to place. Europe and Asia, for example, cost about $8,000 each. The retail price of France's TDCom Company is $565,438+032 (including two batteries and 65,438+0 charger). In addition, due to the existence of the switchboard system, the call charges of Iridium telephone are very high, and there are great regional differences. The price of its call fee mainly depends on three factors: the country where the phone is registered, the phone service operator and where to call, so it is not a fixed number, which is quite complicated and difficult to control. For example, the Earth One network company in Los Angeles set the call fee from southern Africa to North America at 8.0 1 USD/min, while the call fee in North America was only 2.45 USD/min. In Chinese mainland, the domestic call charge for Iridium telephone to land fixed telephone and mobile telephone is 9.8 yuan RMB/minute, and the international call charge is 27.4 RMB/minute; The cost of calling Iridium phone by Iridium phone is 14.60 yuan/minute; The cost of making Iridium calls by land fixed telephones and mobile phones is 14 RMB/minute, which means that whoever makes Iridium calls carelessly will pay the price for his carelessness. In contrast, the local call charges of ordinary mobile phones are only RMB/min in 0.4 yuan, and the basic roaming charges are RMB/min in 0.6 yuan. Even the international call charge of Mini-M satellite phone is only $0.8/minute. Due to the limitation of technology, frequency bandwidth and system cost, the capacity of satellite communication system is very limited. For a long time, satellite mobile phones can't be as popular as ordinary mobile phones, which means that its terminals and telephone charges will not drop too much. Compared with cellular phones, the biggest advantage of iridium satellite phones is that they can communicate in harsh conditions such as environment and climate. So theoretically, the biggest order may come from either the Explorers Association or the Disaster Relief Committee. These users will definitely not "pay without looking at the bill" or pick up the phone and talk for half an hour. That is to say, the limited user talk time will definitely tend to be the shortest. The popularization of the main audience will be difficult to provide enough profit support for this high-tech aristocratic product. By March 2000, there were only 55,000 users of Iridium satellite system in the world, while the number of users in China was less than 1000. This is far from the 650,000 users needed for profit. It is this ancient law of market supply and demand and cost-benefit analysis that doomed the tragic fate of Iridium. No matter how high-tech products are, if they want to be introduced to the market, they must fully meet the needs of consumers, have enough customer groups and sources of income that can make up for the cost.