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Motorola Unveils New Digital Communications Portfolio

Consumer delight forms focus for 'new' Motorola

HANNOVER, Germany--March 18, 1999 - CeBIT--Motorola (NYSE:MOT) today issued a strong challenge to its rivals in the battle for leadership in the wireless communications market. On the opening day of the CeBIT exhibition in Hannover, Germany, it unveiled a complete new portfolio of digital personal communications products and promised Internet-browsing capability across its entire digital mobile phone range in 2000.

The new digital portfolio includes the world's smallest and lightest dual-band GSM mobile phone, the world's first tri- band GSM phone, a new mobile organiser for the company's StarTAC(TM) GSM phones and the first two-way radio product for European consumers.

"We believe that this product range is the best on the market in Europe," said Frank Lloyd, president of Motorola's Personal Communications Sector for Europe, Middle East and Africa (EMEA). "Our aim is to give consumers not just a solution to their communications needs, but sheer delight at being able to take their world with them wherever they go."

Motorola announced that it will make all its digital phones Wireless Application Protocol (WAP) compliant as soon as the interoperability standards for the protocol are agreed. Frank Lloyd said: "This means that consumers can expect to see the first Internet-browsing capabilities appearing on a Motorola GSM phone by the end of the year, and across our entire digital phone range in 2000."

The company's new digital communications product portfolio was described by Bob Growney, Motorola's president and chief operating officer, as among the "first fruits" of the company's renewal process. He said: "When we set out to create the 'new' Motorola, our number one objective was to put the needs of our customers - and ultimately consumers first. These products demonstrate just how far we've come in the last 18 months."

Motorola also commented on its new partnership with MIT's Media Lab to create a DigitalDNA(TM) Lab to research potential new opportunities in the fast-growing embedded electronic solutions market. Jim Norling, president of Motorola EMEA, said: "MIT has some of the finest technology thinkers in the world. We have unrivalled experience in delivering embedded solutions - our DigitalDNA - to customers across the globe. Combine the two, and you've got a powerful partnership to explore the potential for a market that could be worth more than $40bn by 2002."

Jim Norling explained that a core aspect of Motorola's renewal strategy involves forming partnerships and alliances with others in order to deliver the digital world to consumers. He said: "Our $1bn alliance with Cisco, our partnerships with Vodafone and Alcatel on UMTS technology, and last Friday's announcement of our $400m strategic relationship with Dolphin Telecom for the roll-out of TETRA digital two-way radio technology in Europe, are all examples of the new way in which we are operating as we move into the convergence era."
Motorola is a global leader in providing integrated communications solutions and embedded electronic solutions. Sales in 1998 were $29.4 billion.

Editor's notes

Three separate attachments with this release cover the three areas discussed at Motorola's CeBIT media briefing: its corporate renewal strategy; its new portfolio of digital personal communications products; and its alliances and major new contracts. Product background sheets on all new personal communications products announced are included in the media pack.

If you require copies of individual releases and further information concerning items mentioned in this release there are copies available on the Motorola stands, E40 and E60, Halle 26, or on the web at http://www.mot.com/Index/pressindex.html.

BACKGROUND INFORMATION
THE PERSONAL COMMUNICATIONS PRODUCT PORTFOLIO

The following information is based on a presentation given by Frank Lloyd, vice-president and general manager of the Personal Communications Sector for Motorola in Europe, Middle East and Africa, on 18 March 1999 at CeBIT. All items here are attributable to him in quotations.

Understanding the consumer

Over the past 12 months Motorola has conducted extensive consumer research to better understand the needs of personal communications users.

This has led to the understanding that what consumers want is to be able to 'take their world with them' wherever they go, hence the theme of the WINGS brand campaign. This insight has allowed Motorola to tailor product offerings to satisfy these needs.

Digital communications portfolio

At CeBIT 1999 Motorola is unveiling its complete new digital communications portfolio for the consumer marketplace in Europe. This includes:

v3688 GSM phone
The world's smallest and lightest dual-band GSM phone. Recently launched to critical acclaim across Europe.

L7089 GSM 'world phone'
The L7089 tri-band phone operates on all three GSM frequencies. This means with a single handset a user can roam across Europe, Asia and the Americas, where roaming agreements allow.
The phone operates by voice command for not only dialling numbers but also replaying messages and requesting voice mail. It also features an InfraRed capability for transfer of data with a PC or other InfraRed enabled devices.
When shown a preview of this phone at the GSM Congress in Cannes, March 1999, Richard Midgett, chairman of the GSM Association said: "This is what the customer has been waiting for, a phone that truly enables the GSM dream - a global system for roaming in one simple handset. We challenged the industry to deliver this capability and we congratulate Motorola on being the first to respond."

TalkAbout(TM) 200 consumer two-way radio
TalkAbout(TM) 200 is the first two-way radio for the consumer market in Europe. An award-winning product in the USA already, Motorola expects it to be popular with outdoor enthusiasts and among families.
The TalkAbout(TM) 200 will be launched initially in the UK, then also in France, Germany and Spain over the summer.

Advisor(TM) Graphix
An advanced pager which makes it possible to receive email and other information - such as stock market prices - while on the move. It has a number of personal organiser functions including phone number storage, event reminders and to-do lists.

StarTAC(TM)D Dual Slot phone
Not a commercially available product yet. The StarTAC(TM)D is the world's first fully integrated dual-slot phone, designed for use with smartcards to enable users to access a range of electronic commerce services while on the move.
The StarTAC(TM)D is currently being used in a mobile commerce trial in the UK, and will be used by France Telecom Mobiles for its on-line payment trial in the second half of 1999.

Wireless Application Protocol (WAP)
Motorola will launch its first WAP-compliant GSM digital phone in the second half of 1999, enabling Internet-browsing capabilities on a mobile handset. And in 2000, once the interoperability elements of the protocol are finalised, Motorola will make its entire digital mobile phone range WAP compliant.

WWW.MMM
On 17 March Motorola joined with Ericsson and Nokia to announce a joint marketing initiative to simplify the introduction of the mobile internet. Called the Mobile Media Mode, it is a universal icon to identify mobile devices and internet content that are designed to work together.

Personal Networking Vision
Our vision is to create 'Personal Networks'. We see ourselves as providing the tools that enable people to remain connected to their personal network of family and friends as well as to business colleagues and information, wherever they go.


BACKGROUND INFORMATION
THE CORPORATE RENEWAL STRATEGY

The following information is based on a presentation given by Bob Growney, president and chief operating officer of Motorola, on 18 March 1999 at CeBIT. All items here are attributable to him in quotations.

Motorola is a market maker

A market maker does more than just create great products and bring them to market. A market maker will innovate - will see the possibilities, and then make them happen. It will invest in R&D in the interest of creating opportunities for both itself and for others. And a market maker will take a long-term view on its investments.
These are criteria that throughout our 70 year history Motorola has more than matched - the successful commercial launch of Iridium in November 1998 being a classic example of a market maker in action.
But, with the coming of the convergence era, the rules for market-makers are changing. Product cycles are accelerating. Technology options are multiplying. Company roles are blurring.
In light of these and other challenges facing Motorola, such as the changing nature of the silicon industry, we embarked on a renewal process based on a four point strategy:

1. Put consumer and customer needs first, to achieve global
leadership in core businesses

2. Deliver total solutions, through partnerships and alliances

3. Develop new platforms, on which both we and others will build

4. Pursue performance excellence, in order to delight our customers

Put consumer and customer needs first

With the convergence of computing and communications technologies customer needs are changing. Customers no longer want individual products, they want integrated solutions. We have therefore realigned the organisation in order to more sharply focus on consumer and customer needs.
The communications businesses have been consolidated to form a single customer-focused entity, the Communications Enterprise, which accounts for around 70% of revenues. The remaining 30% comes from the embedded solutions businesses: the Semiconductor Products Sector and Integrated Electronic Systems Sector.

Deliver total solutions

We recognise that in order to provide the total integrated solutions that customers want and expect in the new digital world, we can't do it alone.
In the past major manufacturers like Motorola defined success around controlling the value chain. But now customers want to see both competition and co-operation among their suppliers and partners. Hence the spirit of 'co-opetition' which is evident in ventures such as Symbian - which Motorola formed with Ericsson, Nokia and Psion in 1998.
It is our belief that in the future, companies must view their business world as an ecosystem -a community that thrives or dies by virtue of the overall health of its participants.
Therefore Motorola will increasingly enter into partnerships and alliances in order to deliver the digital world to the consumer. Examples include the $1bn alliance with Cisco Systems, partnerships with Vodafone and Alcatel on UMTS (Universal Mobile Telecommunications System) technology, and involvement in trials of mobile commerce in the UK and France.

Develop new platforms

Just as the era of one supplier for all products has gone, so the days of closed, proprietary architectures have gone. One of the characteristics of being a market maker is a willingness to invest in building platforms that both you and others will benefit from.
This is something that Motorola has been active in for some time in Europe. In 1982 Motorola contributed much intellectual property to the creation of the digital GSM standard. More recently we were a founder member of the Memorandum of Understanding to develop the TETRA digital two-way radio standard.
Motorola will continue to build new platforms and new convergence standards, and will aim to generate leverage from our foundation of those architectures. That is why the company is a founding member of the Wireless Applications Protocol (WAP) Forum, a signatory to the Bluetooth specification and active in the UMTS Forum.

Pursue performance excellence

Motorola is engaging in company-wide initiatives to improve quality and reduce cycle time. This project will build on the Six Sigma Quality process that is in operation at our sites across the world.
We will apply performance excellence criteria not just to the quality of our output, but also to the area of customer delight.


BACKGROUND INFORMATION
NEW ALLIANCES, CONTRACTS AND
EMBEDDED SOLUTIONS BUSINESSES

The following information is based on a presentation given by Jim Norling, president of Motorola in Europe, Middle East and Africa, on 18 March 1999 at CeBIT. All items here are attributable to him in quotations.

New alliances and contracts

Motorola has recently formed a number of alliances and won major contracts in which it is working to build communications technology platforms for the convergence era. These include:

-- A partnership (announced 15 March) with the Massachusetts
Institute of Technology's Media Lab to form the DigitalDNA(TM)
Lab (see below).

-- A $400m strategic relationship (announced 12 March) with Dolphin
Telecom for TETRA digital two-way radio infrastructure equipment
and handsets. The agreement is the largest for TETRA technology
in the world to date, and includes the roll-out of a TETRA
network across Germany.

-- A contract (announced 11 March) in partnership with ERG of
Australia awarded by the Transport Authority of Berlin for a
field trial of a smartcard ticketing system in Berlin, to begin
in October 1999.

-- A $50m contract (announced 9 February) with Cellnet of the UK to
deliver GPRS (General Packet Radio Service) capability across its
GSM network, facilitating applications such as Internet-browsing
and mobile e-commerce.

-- A $1bn alliance (announced 8 February) with Cisco Systems of the
US to create an open wireless, digital communications
infrastructure, based on the Internet protocol.

-- Collaborative agreements with Vodafone of the UK (announced 23
February) and Alcatel of France (announced 5 February) for the
development of Third Generation (3G) UMTS technology.

DigitalDNA(TM)

Motorola is the world leader in embedded solutions technologies, with more than 8 billion chips embedded in products in use across the world.
Embedded solutions - which includes not only silicon chips but the software and systems that they're used with - can be found inside more and more of the products we use everyday. Recent estimates suggest that a consumer encounters, on average, 150 semiconductors during the course of each day.
We see our embedded technologies as the 'building blocks' that we provide to our customers that make their products smarter - hence DigitalDNA(TM).

MIT Partnership

On 15 March, Motorola announced that it has formed a partnership with the Media Lab at Massachusetts Institute of Technology in the US to create a DigitalDNA Lab.
Motorola is donating $5m to set up the lab, which will focus on the next wave of embedded solutions technology and look at how to build a platform that will enable 'smart' products to communicate with one another.
The world-class intellectual property created at the Motorola DigitalDNA Lab will be available to Motorola customers, allowing us to provide better solutions to our OEM partners.

Customer focus

Motorola has two businesses in the embedded solutions market: the Semiconductor Products Sector and the Integrated Electronic Systems Sector.
Major customers for Motorola in the embedded solutions business include:
Automotive - BMW, DaimlerChrysler, Ford, GM, Renault, Volkswagen and Volvo.
Imaging and entertainment - Hewlett-Packard, Hongkong Telecom, Kodak.
Networking and computing - 3Com, Alcatel, Cisco, Ericsson, Lucent, Nokia, Nortel.
Wireless subscriber - Motorola and Philips.

Telematics

We predict that telematics will become the first major 'convergence' application. It brings together in-car embedded solutions technologies with wireless communications technologies both cellular and GPS (Global Positioning System) satellite.
Motorola defines telematics as a wireless communications system designed for the car providing drivers with personalised information, messaging, entertainment and location-specific travel and security services.
At CeBIT 1999 Motorola is displaying a Mercedes-Benz equipped with its Tele-Aid telematics technology.

     CONTACT: Motorola EMEA Press Office @ Hill and Knowlton

              Niyi Akeju, 44 171 973 4477

              email: [email protected]