00:00So why did they fall? Well, let's take a look at Motorola's business, to understand how they made
00:04money. Now, there were three main segments. First, there was the mobile devices segment,
00:09which basically consisted of selling phones. Then there was the home and networks segment,
00:14which consisted of selling cable TV, set-top boxers, internet modems, and routers and wireless
00:19home phones. Finally, there was the enterprise mobility solutions segment, which consisted of
00:24selling 2i radio barcode scanners and other similar things to businesses. Now, as you can see,
00:29the mobile devices segment was the largest contributor to revenue. And given how competitive
00:33this industry was, Motorola realized that in order to survive, they needed to cut costs.
00:38So they started to outsource manufacturing to places like China and Taiwan. But over time,
00:43as these countries got better and better at manufacturing, they started to poach market
00:47share from Motorola themselves. For example, by 2004, China was exporting four times more mobile
00:53phones than Motorola. But Motorola still held an advantage in terms of R&D. They were still able
00:58to innovate faster than their competitors and thus were able to maintain their position.
01:02However, this too changed after Steve Jobs came back to Apple in 2007. You see, for years,
01:08Apple had been a laughingstock in the mobile phone industry. Sure, they had some decent models here
01:13and there, but for the most part, their phones were incredibly clunky and laggy compared to their
01:17competitors. But this all changed when they released the iPhone. It wasn't just the sleek design or the
01:22multi-touch interface that blew people away. It was also the simplicity. Using an iPhone was way
01:28easier than using any other phone. There were no keyboards to type on. Instead, you just touched
01:33what you wanted. This blew Motorola away. They had never seen anything like this before. And they spent
01:38hundreds of millions of dollars trying to reverse engineer the iPhone. But the more they looked,
01:43the more they realized that it wasn't just a software issue, it was a software issue.
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