Ed Zander

Ed Zander
Zander in 2002.
Born	Edward J. Zander 1947-01-12January 12, 1947 (age 79) Brooklyn, New York, U.S.
Nationality	American
Education	Rensselaer Polytechnic Institute (B.S., electrical engineering, 1968) Boston University (M.B.A.)
Alma mater	Rensselaer Polytechnic Institute
Occupation	Business executive
Years active	1970-2008
Employer	Data General Apollo Computer Sun Microsystems (1987-2002) Silver Lake Partners (2003) Motorola (2004-2008)
Company	Motorola, Inc.
Title	Chairman and chief executive officer, Motorola, Inc.
Term	2004-2008
Predecessor	Christopher Galvin
Successor	Greg Brown (CEO) David Dorman (chairman)
Known for	Chairman and chief executive of Motorola The Motorola Razr President and chief operating officer of Sun Microsystems
Spouse	Mona Zander
Children	2

Edward J. Zander (born January 12, 1947) is an American business executive who served as chairman and chief executive officer of Motorola, Inc. from January 2004 until January 2008, remaining as chairman until May 2008. He was previously president and chief operating officer of Sun Microsystems.

Zander's appointment ended three generations of Galvin family leadership at Motorola, the company having been founded by Paul Galvin in 1928 and run most recently by his grandson Christopher. He inherited a business with a difficult internal culture, whose divisions were described in contemporary reporting as warring tribes, and he set out to impose cooperation between them and to reorient the company towards consumer products.

His first two years were among the most successful in Motorola's history. The Razr V3, a clamshell handset 13.9 millimetres thick that was launched in late 2004, became a mass-market object of desire and eventually sold about 130 million units across its variants, the best-selling clamshell telephone ever made. Motorola's share of the global handset market rose above 20 percent.

The second half of his tenure reversed that. Motorola relied on the Razr for too long, discounting it heavily to sustain volume and destroying its margins in the process, and was late to third-generation networks and to the software-centred devices that followed Apple's introduction of the iPhone in 2007. The company posted a loss of $181 million in the first quarter of 2007, its handset share fell to about 13 percent, and the share price declined about 40 percent. Carl Icahn built a stake and waged two proxy campaigns. Zander stepped down as chief executive on January 1, 2008, succeeded by Greg Brown.

Early life and education

Family

Edward J. Zander was born in Brooklyn, New York, in 1947, the son of Jewish immigrants, his father from Poland and his mother from Greece. Neither had been able to afford a university education, and both pressed it on their children. His father had wanted to become a lawyer but took work as a furrier in order to support his own ill parents.

Zander acquired the nickname "Fast Eddie" from childhood friends. A Boston Globe profile attributed it to the hustle of a street kid spoiling for a good fight. Zander himself put it more briefly: "I'm from New York, so I'm New York fast."

Education

Zander took a bachelor's degree in electrical engineering at Rensselaer Polytechnic Institute, graduating in the class of 1968, and subsequently a Master of Business Administration at Boston University. Boston University later awarded him an honorary Doctor of Humane Letters.

Career

Early roles

Zander held management positions in the minicomputer industry at Data General and at Apollo Computer, the workstation manufacturer, before joining Sun Microsystems in 1987.

Sun Microsystems, 1987-2002

Zander spent 15 years at Sun and rose through the 1990s from vice president of corporate marketing to president of the software division in 1991, and to the same role in the systems division in 1995.

He was promoted to chief operating officer of the whole company in January 1998 and additionally to president in April 1999. In those roles he was responsible for Sun's seven product divisions, covering engineering, product development, sales, service and marketing, with the chief technology officer and corporate brand marketing also reporting to him.

The period covered Sun's greatest commercial success. The company's servers and its Solaris operating system were central infrastructure for the internet build-out of the late 1990s, and Sun's revenue and share price rose steeply before the collapse of technology spending in 2001. Zander's reputation as an operator, and as a forceful public presence, was made at Sun.

He left in 2002. Scott McNealy, the chief executive, resumed the duties of president and chief operating officer until Jonathan Schwartz was promoted to those roles on April 2, 2004.

Silver Lake Partners

After leaving Sun, Zander became a managing director at Silver Lake Partners, the technology-focused private equity firm.

Motorola, 2004-2008

Appointment

The Motorola board selected Zander on January 5, 2004, to succeed Christopher Galvin, who had announced his retirement in September 2003. The appointment ended the Galvin family's leadership of the company across three generations.

The principal internal candidate was Mike Zafirovski, who had come from General Electric and returned the handset business to profitability. The board, seeking a more thorough change of direction, preferred an outsider with experience of running a complex organisation. Other names considered included Betsy Bernard of AT&T, Richard Notebaert of Qwest and Lawrence Babbio of Verizon. Zafirovski remained until January 31, 2005, and then resigned.

Early actions

Zander's first task was the separation of Freescale Semiconductor, the spin-off of Motorola's chip business that had been initiated shortly before he arrived and which completed in 2004.

He announced that he would concentrate the company on consumer electronics and on repairing customer relationships, assigning the chief information officer, Samir Desai, to work directly with Nextel, one of Motorola's largest and most dissatisfied customers. He acquired 12 companies during his tenure, closed underperforming businesses, and expanded the divisions selling radio equipment to government agencies, cable set-top box components and wireless infrastructure.

To address the internal culture he introduced a bonus structure in which 25 percent of awards depended on customer satisfaction, meeting product deadlines and cooperation between departments rather than on divisional results alone. He promoted a strategy he called "seamless mobility", intended to link Motorola's products across the home, the car and the person, and to bring internet technologies into wireless devices.

The Razr

The Razr V3 was introduced in the second half of 2004 as a limited-volume premium product, priced around $500 on contract. Its aluminium body, 13.9 millimetres thick, and etched keypad made it visually distinct from anything else on sale, and demand exceeded expectations by a wide margin.

Motorola cut the price repeatedly to expand the market, and the Razr became a mass-market product. Across its variants it sold about 130 million units, the highest figure achieved by any clamshell handset. Zander compared the product's brand recognition to Kleenex, Coca-Cola and the iPod.

Motorola's global handset share rose above 20 percent and its share price roughly doubled over Zander's first two years.

The Rokr

Motorola and Apple collaborated on the Rokr E1, announced in September 2005, the first mobile telephone able to play music purchased from the iTunes Store. The device was limited to 100 songs regardless of available memory and was poorly received. Steve Jobs introduced the iPod Nano at the same event, which overshadowed it, and the partnership deteriorated. Zander later said publicly that Apple had undercut the Rokr deliberately.

Decline

Motorola did not produce a successor to the Razr. It extended the line with variants and colours, including a red edition marketed for Valentine's Day in February 2007, and sustained volume by discounting, which caused gross margins in the handset division to collapse. The company was slow to ship competitive third-generation devices at a point when carriers were building 3G networks, and it had no answer to the software platforms that followed Apple's introduction of the iPhone in January 2007.

Motorola reported a loss of $181 million for the first quarter of 2007. Its handset market share fell from more than 20 percent to about 13 percent, and it lost ground to Samsung and LG Electronics. The share price fell about 40 percent over roughly a year.

Ron Garriques, who had been responsible for the Razr, left for Dell. Stu Reed, his replacement in the mobile devices division, did not reverse the decline. The unit was not stabilised until Sanjay Jha took charge of it in 2008, after Zander's departure.

At the Consumer Electronics Show in Las Vegas in January 2007 Zander rode a yellow bicycle onto the stage to deliver his keynote address, an appearance later cited in commentary as emblematic of a company presenting style in the absence of new products, in the same month that Apple announced the iPhone.

Carl Icahn

After the first quarter loss of 2007 the activist investor Carl Icahn pressed Motorola first for a share buyback and then for a seat on the board. He nominated himself for election at the annual meeting in May 2007 and was defeated.

He returned in 2008, increasing his holding to about 142 million shares, roughly 6.3 percent of the company, and launched a second proxy campaign. Motorola settled by agreeing to support two of his nominees for the board. Icahn described the replacement of Zander as a positive step, though one he considered overdue.

Departure

Zander stepped down as chief executive on January 1, 2008. He was succeeded by Greg Brown, previously president and chief operating officer. He remained chairman until May 2008, when the former AT&T chief executive David Dorman succeeded him.

Motorola separated its handset business in 2011 as Motorola Mobility, which Google acquired that year and sold to Lenovo in 2014.

Board memberships

Zander served on the board of Seagate Technology from 2002 to 2004 and on the board of Time Warner from January to May 2007. He has been a director of EagleView Technologies since 2008.

He has served on the board of the Jason Foundation for Education, on the science advisory board of Rensselaer Polytechnic Institute, on the advisory board of IOCOM Communications and on the advisory board of the Boston University School of Management.

Business philosophy and management style

Zander was an operator and a marketer rather than an engineer by temperament, despite his electrical engineering degree, and both his successes and his failures at Motorola followed from that.

His diagnosis of Motorola on arrival was that the company's problem was organisational rather than technical: that its divisions competed with each other, withheld information and treated customers as an inconvenience, and that a company in that condition could not ship a coherent product line. His remedies, tying a quarter of bonuses to cross-divisional and customer measures and intervening personally in the Nextel relationship, addressed that diagnosis directly and produced results.

His weakness was product pipeline management. The Razr was a design achievement that Motorola did not repeat, and Zander's response to its success was to extend and discount it rather than to fund a successor, a decision that consumed the brand equity the product had created. He also underestimated the shift from hardware design to software platforms, an error he shared with most of the industry at the time but which was more damaging to Motorola because the Razr's success had concealed how thin the company's software capability was.

He was direct in public to an unusual degree for a chief executive of a large listed company, and several of his remarks, including those about Apple after the Rokr, were reported as undiplomatic.

Controversies

Securities class action

Zander was named as a defendant in a securities fraud class action brought on behalf of investors who bought Motorola stock between July 19, 2006, and January 4, 2007, alleging that the company had issued false and misleading public statements about its handset business during that period.

Compensation

Zander received $12.5 million in incentive-based pay for 2006, much of it linked to Motorola's financial results, together with a salary of $1.5 million. The award attracted criticism because it covered a year in which the handset division's performance had deteriorated sharply in the second half and the share price had begun to fall.

Assessment of the Razr strategy

The principal criticism of Zander's tenure is that Motorola capitalised on the Razr for too long. By cutting prices to maintain unit volume the company converted a premium product into a commodity, eroded its own margins and delayed investment in replacements. Analysts and later accounts have treated the episode as a standard illustration of the danger of a single successful product in a business with short cycles.

A more sympathetic assessment notes that Motorola's software and platform weaknesses predated Zander, that the company had missed the transition from analogue to digital telephony in the 1990s under previous management, and that the iPhone changed the terms of competition in a manner few incumbents handled well.

Personal life

Zander is married to Mona Zander. The couple have two sons.

He was a prominent public speaker during his years at Sun and Motorola, appearing on Charlie Rose and on C-SPAN and giving keynote addresses at industry conferences including the Consumer Electronics Show.

External links

• Edward Zander collected news and commentary at The New York Times