Last August, not long after the devastating school shooting in Uvalde, Texas, officials in Houston—like many others across the state and the country—upped spending on safety measures. The city approved $2.3 million worth of new gear for its dedicated school security division. More than half of that money went to just one company: Motorola Solutions.
Motorola once dominated cell phones, but in the past few years it has become a huge player in public safety—one of the hottest areas in tech. While many big tech companies have struggled recently, Motorola sales and earnings per share both rose by double-digit percentages in 2022, while cash flow from operations increased 40%, and the company rose to No. 418 on the Fortune 500.
None of that business came from cell phones, the revolutionary product that Motorola invented—producing the world’s first working mobile phone in 1973—and that made it a household name. Eclipsed by Apple and other smartphone manufacturers, Motorola shed its money-losing consumer phone unit, including its signature Razr flip phone, along with its cell tower business and others, starting in 2008. (Motorola-branded phones are still for sale, but they’re now made by Chinese computer giant Lenovo.)
What remained was the company’s police radio business, a steady-selling but unsexy product that many thought would also soon be replaced by smartphones. Instead, the company’s foothold in that market—along with nearly three dozen acquisitions in recent years—has helped make Motorola the 800-pound gorilla in a business that is, unfortunately, booming. Mass shootings, rising crime rates, and public concern over police brutality have created a growing market for technology that can strike a balance between public safety and a reduced use of force. Security spending increases like Houston’s, in the public and private sectors alike, are becoming routine, and Motorola has positioned itself to serve the growing market.
The person responsible for Motorola’s revival is CEO Greg Brown, who took over the top job at the company in 2008 and has led the company’s transformation around its security business. “I knew from the first day I joined Motorola that the best part of the company was the part few cared about,” Brown tells Fortune. “Motorola could do a lot more by doing less.”
Less has definitely been more: Three-quarters of Motorola’s sales, which are expected to approach $10 billion this year, now comes from police and fire departments, 911 call centers, and other state- and city-run public safety departments. That makes the company about 10 times the size of its closest rival, Axon Enterprise, which is best known for its Taser stun guns but is also the leading maker of body cameras. Public spending on the category seems likely to keep growing: President Biden’s recent American Rescue Plan included $10 billion in spending on public safety tech. Motorola is also benefiting from an upgrade cycle. In October, for instance, Florida’s Miami-Dade County agreed to pay Motorola $165 million over 10 years to buy the company’s latest version of its first responder communicators, which are dubbed smart radios, and which now have touch screens and can run apps.
Greg Brown has been CEO since 2008, leading Motorola throughout its turnaround.Courtesy of Motorola Solutions
One of Motorola’s latest products is the M500, an automated surveillance and command center for patrol cars. It’s not quite RoboCop, but it’s close. Front and rear cameras automatically monitor for threats, scanning anyone approaching for weapons. Body cameras, which Motorola also makes, can be hooked up to the system. All that imagery is fed into A.I. software that runs on a specialized in-car computer system; the system can issue an automated danger alert to the officers in the car, as well as to police dispatchers or 911 call centers, many of which are also running on Motorola’s systems. Motorola’s marketing materials say the M500 is “not just eye observing, it’s brain analyzing.”
The fastest-growing portion of Motorola’s business, however, is its line of security products for hospitals, event spaces, and schools. State Farm Stadium in Arizona used Motorola cameras and software to monitor the crowd at this year’s Super Bowl. In December, Motorola bought a company that makes a panic button system already used in thousands of schools to quickly lock down classrooms and call for help. A Motorola camera connected to its A.I. software can “watch” a sensitive area and detect and report unusual activity on its own. “You used to look at video after something bad happened,” says Motorola’s chief technology officer Mahesh Saptharishi. “We now have the capability to make video into something that can be used as a prevention method.”
As the company has grown and expanded into new businesses, it has also been the target of more attention and scrutiny. Three years ago, Motorola bought Vigilant Solutions, a small company that specializes in license plate readers—automated, high-speed cameras that can be mounted on squad cars or at intersections to capture millions of images of passing vehicles. The American Civil Liberties Union and other privacy advocacy groups argue that such devices often violate U.S. privacy protections. Vigilant has faced criticism for selling access to its database of license plate images to Immigration and Customs Enforcement (ICE) and other federal agencies that target immigrants. More recently, advocacy groups, in the wake of the overturning of Roe v. Wade, have warned that license plate readers could be used to enforce local laws that forbid residents from traveling out of state to obtain abortions. “We have companies like Motorola that are promoting these miracle solutions for crime reduction, but that is just salesmanship,” says David Maass, director of investigations at the privacy-focused nonprofit Electronic Frontier Foundation. “I don’t think anyone is taking steps to mitigate the unintended consequences, like racial bias, and other ways that these new technologies may skew law enforcement.”
For the moment, many of these concerns remain purely hypothetical. There’s no evidence, for example, that Motorola’s devices or software have been used to target people traveling for abortion care. Motorola says it puts controls in place to make sure its products are in compliance with local and federal laws, including privacy laws. The company does not allow individuals to buy access to license plate databases that it maintains, and Motorola notes that these databases only track car locations and do not include any personal information about the owners. More broadly, Motorola says it provides tools and protections to try to ensure its technology is being used for its intended purpose, which is to promote safety; how its products will actually be used is up to police departments, local officials, and lawmakers.
Regardless of the controversy, Motorola stands out for now as one of the great tech turnaround stories in recent market history. Nearly all of the companies that Motorola once competed with, including BlackBerry, Ericsson, and Nokia, are worth a fraction of what they were at their peak, unable to pivot to new ventures. Motorola is the one exception; with a market cap of about $48 billion in early June, it is worth more than it was back when Razr phones were the hot new gadget. “Greg Brown has been a success on many levels,” says Keith Housum, an analyst who follows the company at Northcoast Research. “The stock has blossomed, and the company has been transformed completely.”
From cell phones to surveillance
Motorola, or some version of it, has been on the Fortune 500 every year since the list’s debut in 1955; as recently as the 1990s, it was one of the 25 biggest companies in the U.S. by revenue. But the company eventually lost its competitive edge—prompting a makeover whose story starts with Carl Icahn.
In 2007, the activist investor and corporate raider bought a stake in Motorola, demanding board seats and ultimately backing a plan to spin off the money-losing phone business. Then-CEO Ed Zander, who had revived the company with the launch of the ultrathin Razr in 2004, was resistant. Zander, though, was prone to public gaffes. In April 2007, the CEO told the Wall Street Journal: “I love my job; I hate my customers.” Icahn and others seized on the quote, questioning Zander’s ability to lead a consumer-products company. Within a year Zander was out, and Brown, who had run Motorola’s nonconsumer businesses before being elevated to Zander’s No. 2, was in.
At that time, cell phones still brought in about three-quarters of Motorola’s revenue. But it was clear, at least to Brown, that the company was falling farther and farther behind. By the time Brown took over, the iPhone was six months old and starting to thrive. Motorola had added iTunes to a number of its handsets, as well as Space Invaders. But even the company’s top phones were low-IQ, at best. Brown, like Icahn, quickly came to the conclusion that Motorola was never going to be able to catch up to Apple. In March 2008, just two months after becoming CEO, Brown announced a breakup that moved the surviving company—the Motorola that Brown would run and continues to run today—out of the phone business.
Brown, 62, has seemed to gravitate toward difficult jobs—and to be comfortable ruffling customers’ feathers. One of his first business ventures, he tells Fortune, involved painting house numbers on curbs. Brown, then a student at Rutgers University in New Jersey, would go out very early in the morning, and paint 125 house numbers—unsolicited by the homeowners. He would drop off his contact information at each home, then go back later to see if the person was willing to pay for the job. (He says he also offered to remove the number free of charge.)
It was in this job, Brown explains, that he first got experience making deals with police departments. Brown knew that curbs were public property, not owned by homeowners. Before heading out to a new town, he would pitch local police on the fact that curb numbers were beneficial to first responders. That, along with advance notice, got Brown a solicitor’s license as well as protection if a homeowner reacted angrily.
At Motorola, Brown is a picky hirer, more interested in getting the right person than just filling an opening, and he prizes candidates who show a capacity to learn. “He spends an enormous amount of time on people and talent,” says Rajan Naik, who was hired by Brown in 2016 to be Motorola’s chief strategy officer. Brown calls recruiting and retention the “secret sauce” of what has made him and Motorola a success. He is also known for his attention to detail. During the pandemic, Naik says, Brown avoided the common corporate practice of appointing a crisis task force. Instead, the CEO would call Naik and other executives daily to troubleshoot. “I don’t like the phrase task force, because it implies it’s outside of the business and special,” says Brown. “We just flexed the management muscle that had already been built.” When Brown became aware of a supply-chain issue, Naik says, Brown would phone the supplier’s CEO to navigate the problem. “It didn’t matter if it was a $3 or a 30-cent part that was causing the problem,” says Naik. “He would understand to the third or fourth level down of suppliers what was causing the bottleneck.”
Brown has been well rewarded for his role in Motorola’s success. His total pay package was just over $21 million for 2021, making him one of the highest-compensated executives in Chicago, where Motorola is based. Two years ago, Bruno Mars performed at the wedding of Brown’s son: The affair, which was held at a high-end hotel on Cape Cod and also featured Michelin-starred chef Mario Carbone, was widely covered in the celebrity press as one of the most over-the-top events of the year.
It took a while for Brown to reap such rewards, because Motorola’s turnaround was far from an overnight development. The company split-up was announced in 2008, but it took until 2011 to actually spin off the cell-phone unit. Two years later, the company was still struggling financially. Brown explored selling the company but got no acceptable bids. Motorola’s stock price had bottomed out at around $60, and its available cash had fallen perilously low.
For Brown, getting out of the rut involved letting go of a favorite business. Despite its avowed commitment to safety and security technology, Motorola had held on to a firm that made handheld computers and scanners used primarily by UPS, FedEx, and other shippers to track packages. Brown still had faith in that business—he had been personally in charge of integrating it after its purchase in 2007—but sales had stagnated. In mid-2013, Motorola bit the bullet and sold the unit for $3.5 billion, or $500 million less than it had paid, to Zebra Technologies.
That divestment freed the company to focus fully on security. In May 2015, Motorola got a $1 billion investment from venture capital firm Silver Lake. At the time, it was one of the largest single investments ever made by Silver Lake, which tended to specialize in high-tech startups. In sealing the deal, Brown was hands on. Brown is an avid Chicago Bulls fan, but he left town while his team was in the NBA playoffs so he could go to San Francisco to meet with Silver Lake’s managing partner, Egon Durban, who needed back surgery and couldn’t travel. Brown met Durban at his home: After negotiations, the two watched the Bulls game. Durban joined Motorola’s board later that year and is still a director. “Everything we do is predicated on trust,” says Durban. “We knew that Greg had the ability to run a much larger business.”
Brown has grown Motorola mostly through acquisitions: The company has bought 35 firms since 2015. Most have been relatively small, and only a few have added a significant amount of revenue on their own. And cumulatively, the deals have added a good deal of debt. Motorola now has $6 billion in long-term debt, up from just over $3 billion at the end of 2011—a relatively high amount compared with Motorola’s annual revenue.
Brown says his focus for deals hasn’t been immediate growth but rounding out Motorola’s product offerings for the long term. The $1 billion acquisition of Avigilon in 2019, for instance, is the basis for most of the company’s video capabilities, which many analysts point to as key in Motorola’s future growth. And part of Motorola’s pitch is that it’s a one-stop shop, as well as being compatible with equipment from rivals. Private businesses that buy from Motorola can also quickly connect their safety systems to those of local law enforcement. “How we have built the company, how we have expanded our services, and what has driven us is not just about revenue or earnings,” says Brown. “Supporting and partnering with frontline first responders is fundamental to what we do.”
Another part of Brown’s pitch is that Motorola does almost no business in China, where interference with private businesses has become a major source of concern for tech companies and Washington. Motorola knows this firsthand. The company is in a long-running legal dispute with Hytera Communications, alleging the Chinese rival stole its intellectual property. Hytera has countersued, saying Motorola maintains a monopoly in the U.S. in the radio emergency communications market. In 2020, a jury in federal court in Illinois ruled that Hytera must pay Motorola $746 million, later knocked down to $600 million, for the IP theft, but Hytera is appealing the ruling, and has yet to pay. All that has soured Motorola on doing business in China.
“The rationale for investing in China has completely changed from 35 years ago,” says Brown. “Intellectual property theft is real and pervasive. Today, companies need to be clear-eyed about China and proceed at their own risk.”
Risks and rewards
So far Brown’s approach appears to be working. Motorola’s sales topped $9 billion last year, up from $5.6 billion in 2015. Earnings have more than doubled, to $1.3 billion last year. Analysts expect earnings to rise another 10% this year. Investors have noticed, pushing shares of Motorola up nearly 150% in the past five years, far outpacing such high-flying tech stocks as Alphabet and Amazon and about double the rise of the Nasdaq Composite index over the same period. At a recent $278, its stock price is up 25%, and it touched an intraday record-high of $299 in May—though at a price-to-earnings multiple of 35, the shares are now costly in the eyes of some analysts.
By far the biggest risk for Motorola is that its fast-growing business touches on so many issues—privacy, gun violence, and police brutality—that provoke contention and, sometimes, litigation. Motorola was sued by Uvalde parents last year, along with the gun manufacturer, the school district, and others, in the wake of the town’s school shooting; the parents alleged that Motorola’s equipment failed the town’s first responders during the incident. (Motorola says the lawsuit is “without merit.”) Two years ago, a class action suit was filed against a division of Vigilant, alleging the company violates privacy laws. That lawsuit was dismissed, but last year, an advocacy group, the New Civil Liberties Alliance, sued two Florida cities, saying their use of license plate readers purchased from Vigilant violated Fourth Amendment protections. (Vigilant and Motorola were not named in that litigation, which is ongoing.)
Security products for hospitals, event spaces, and schools are now the fastest-growing element of Motorola’s business.Courtesy of Motorola Solutions
Of course, the debate over public safety and how to achieve it in a way that is fair for all draws more focus on the topic—which could in turn stoke opportunity for Motorola. “How communities and emergency responders effectively manage public safety is one of the most complicated questions that we face as a society, and that’s what Motorola is tackling,” says Silver Lake’s Durban. And Durban, like other investors, seems convinced that Motorola is tackling those problems better and faster than its bigger predecessor company would have. He calls Brown’s makeover “an A++ job all around.”