Motorola 2012 Annual Report Download - page 10

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computer aided dispatch, and multimedia/video. Our comprehensive service offering in this segment includes mobility
consulting, system design and installation, network and device management, and product support.
Our Strategy
Our strategy in the Government segment is to partner with our customers to enable them to deliver reliable services
efficiently through innovative products and best-in-class services. Thought leadership and innovation are core to the effective
partnership with our customers. We deliver innovation by: (i) developing next-generation public safety solutions including
devices, public safety LTE systems, and critical command center applications; (ii) leading the ongoing migration to digital
products; (iii) managing the potential public/private convergence of 700MHz public safety systems in the U.S. and digital
dividend spectrum worldwide; (iv) continuing to be an industry leader in APCO 25 and TETRA standards-based voice and data
communication systems around the world; and (v) enhancing our services offering through network and application integration,
and network management. We continue to actively manage our product and services portfolio, investing to expand into
attractive and complementary vertical markets to strengthen our customer relationships.
Our Customers
We address the communication needs of government agencies, state and local public safety and first responder agencies,
and commercial and industrial customers. Our largest customer is the U.S. government (through its various branches and
agencies, including the armed services), which represented approximately 10% of this segment's net sales, and 7% of the
Company's net sales in 2012. The loss of this customer could have a material adverse effect on our revenue and earnings over
several quarters, because some of our contracts with the U.S. government are long-term. All contracts with the U.S.
government are subject to cancellation at the convenience of the U.S. government. Net sales to customers in North America
represented 64% of this segment's net sales in 2012.
We believe that there are a large number of government and commercial customers globally who have yet to replace aged
analog infrastructure with next generation digital systems, that enables enhanced features and a more efficient use of spectrum.
We also believe government and commercial customers globally have yet to experience the benefits of converged wireless
communications, mobility, and efficiencies realized through applications enabled by mobile broadband. In addition to serving
our existing customers, we believe that we have opportunities to pursue profitable growth by extending our reach across new
technologies, including public safety LTE systems.
Our sales model includes both direct sales by our in-house sales force, which tends to focus on our largest accounts, and
sales through our channel partner program. Our channel partners include distributors, value added resellers and independent
software vendors. Resellers and distributors each have their own sales organizations that complement and extend the reach of
our sales force. With deep expertise about specific customers' operations, resellers are very effective in promoting sales of our
product portfolio. The independent software vendors in our channel partner program offer customized applications that meet
specific needs in the vertical market we serve.
Our Competition
The markets in which we operate are highly competitive. Continued evolution in our industry and technology shifts are
creating opportunities for established and new competitors. Key competitive factors include: product performance, product
features, product quality, availability and warranty, price, availability of vendor financing, quality and availability of service,
company reputation and financial strength, partner community, and relationships with key customers. Our strong relationships
with customers and partners, technology leadership, breadth of portfolio, product performance and support position us well for
success.
We experience widespread competition from a growing number of existing and new competitors, including large system
integrators and manufacturers of private and public wireless network equipment and devices. Competitors include: Alcatel-
Lucent, Cassidian, Harris, Hytera, Kenwood, Sepura and Tait.
Large system integrators are seeking to move further into the government customer space. We and our competitors may
serve as subcontractors to large system integrators and are selected based on a number of competitive factors and customer
requirements. Where favorable, we may partner with large system integrators to make available our portfolio of advanced
mission-critical network infrastructure, devices, applications and services.
Several other competitive factors may have an impact on our Government segment, including: evolving developments in
the 700 MHz band, increasing encroachment by broadband and IP solution providers, and new low-tier vendors. As demand for
fully integrated voice, data, and broadband systems continue, we may face additional competition from public
telecommunications carriers and telecommunications equipment providers.