Was this Microsoft’s bing strategy  all along:

• Hire Yahoo Search braintrust
• Rebrand Live Search
• Focus on algorithms, presentation tweaks and tools.
• Throw the Kitchen Sink at it. Somewhere between 50 and 100 million into a scorched earth launch and marketing strategy to see if it moves the market share the needle. Try and buy users through cashback incentives.
• If yes – throw more Kitchen Sinks
• If no – back to the table with Yahoo

We will probably know by the end of this month how this hypothetical first decision plays out. According to ComScore, bing was only up 0.4% in June. Google still holds over 65% of the US search market and Microsoft, despite the investment is at 8.4%. While Microsoft may be the most profitable company in history, with unlimited resources to launch products, bing is no bang, and all the Kitchen Sinks available won’t land them a credible second place in search on their own.

It’s been intriguing following the long expected bankruptcy of GM today. While the coverage has been substantial… there is no doubt the long decline and demise breakup of a 100 year old icon of industrial power, with the continued destruction of Americans’ livelihood from fallout of GM and it’s vast supply system, makes June 1, 2009 a day not to be forgotten in American business history… However, I believe the true story is being overlooked. We’re witnessing something more significant than the end of a company… it’s really a metaphor for the death of the industrial age.

I don’t profess to be an expert on the automotive sector. I know the business very well, and I’ve watched it closely for years from the perspectives of both investment and ownership knowledge. And not just cars in America, but around the world.. I current;y own shares in Toyota because I believe they are the global automotive standard in lean manufacturing processes and in continual product development. I invested in Toyota because their cars met my standards and I bought one. Now, I apparently own a piece of the 60% of Government Motors that will emerge from Chapter 11. It’s not an investment I would make, nor do I… at least as of June 1, 2009… expect to buy one of their cars. I stand by what I said on my personal blog last October when I wrote “Exctinction”, suggesting that we do not need GM, Chrysler or Ford any more. For decades, these companies have gazed nostalgically in their rearview mirrors hypnotized by their past glory, blind to  the approaching threat of first German, then Japanese, and Korean manufacturers, ignoring consumers who had long before given up on their products.

So wheat does GM’s  Chapter 11 filing really signify? On the day of the filing, the Dow climbed 221 points or 2.6%. The market at least, is saying that Chapter 11 is good news, that the uncertainty is behind us. That a company, once as large as Microsoft, Toyota and Google combined, that once commanded 50% of  the US automotive market, is no longer capable of maintaining its Dow 30 or S&P 500 status. In effect, the market is saying GM doesn’t matter, and it doesn’t.  We’re not a country  whose might is measured by industrial icons anymore. Steel, rubber, automobiles… they defined the first half of America’s 20th century. The automotive industry, from 1970 to 2000, experienced not only disruption, but distraction from the public focus as seductive new products (electronics, home computing, mobile communications) emerged that diminished the significance of cars in our lives. And with its long, slow decline, we traded our standing as a manufacturer of industrial-age machines, for that of a manufacturer of information-age ideas.

And that is how America is measured today. Not by industrial might, but by information might. Google, Apple, Microsoft, Cisco, Oracle, Disney, Walmart, Dominant in their markets, vast in their scope and scale, and broad reaching in influence beyond that of an automotive company… even one as large as GM in their halcyon days. Welcome to the Information Age, good-bye Industrial Age.

It’s hard to consign a once vibrant and innovative company to the technology graveyard, but Motorola is clearly in a death spiral. The company that brought us the StarTAC and DynaTAC cell phones, 6800 and 68000 series microprocessors that powered early Apple, Atari, and Amiga personal computers, invented Six Sigma quality standards, introduced the first high powered germanium transistor, not to mention key developments in television, satellite and space technology is marching toward its inevitable demise.Let’s look at its business units:

Home & Networks Mobility

An entrenched customer base in Cable MSOs, but slow development and long time horizons for installed cable boxes mean that there is not significant demand for product innovation by the cable operators or consumers, and during the downturn, cable is likely to work harder to hold customers, while having a harder time upselling new features such as DVRs etc. Motorola is clearly several generations behind any comparable home entertainment technology standard. Compare the sophistication of a Motorola to AppleTV, a product that, with its peerless DNA, has still struggled to find relevance. I have a Comcast set top box made by Motorola, with a DVR, deployed last August. It sits in a room on top of an 8 year old Sony Home Entertainment DVD/Surround Sound System. 20 feet away, on my stereo rack is a 3 year old Roku Soundbridge. The Motorola box works, but it can’t compete with the Sony or Roku for refinement or product maturity. Any of the display commands on the STB (Play, Pause) are truncated to PLA or PAU – again, this is a 2008 device. Meanwhile the Sony system has a clear, bright, and fully informative display, as does the Roku, where the florescent readout is one of the most elegant in the CE sector… from a company whose market cap is a rounding error in comparison to Motorola.

Enterprise Mobility Solutions

A possible bright spot – less commoditization, and a moat around the core business, but if the housing downturn affects municipality tax bases, then upgrades to police, fire and EMT services will be few and far between – meaning more mileage for the Crown Victoria fleets, and more hours on the existing Motorola scanners. RFID segments could be an opportunity. As the NFL season starts, we’ll be able to again see the ubiquitous Motorola logo on the coaches headsets on the sidelines, reinforced with the company name on the mic. A reassurance that there is, for the moment a pulse in Schaumberg.

Mobile Devices

As Apple and Research In Motion surf the tsunami of smartphone popularity, Motorola’s ship has sunk. Yes, the DynaTAC started the mobile phone revolution, yes, the StarTAC and RAZR were two of the most popular mobile devices of all time. But in Q4 of 2008, Motorola’s market share collapsed by 50%, now down to about 8.7% of the market. The halo around the iPhone and the Blackberry, the momentum of HTC, LG and Samsung will only serve to drive their share even lower in upcoming quarters. Even the Android OS is unlikely to help – cell phones, some 25 years into their lifespan are valued in the consumer market for the form of the device, function follows form. Further, most of the thought leadership that brought the RAZR to market has moved on, and with their market share decimated, Motorola will struggle to find the resources to innovate in R&D. And while Motorola has profited through divestiture of its divisions in the past, they will likely have to pay to unload the mobile unit.

Lastly, much has been made of Sanjay Jha’s compensation package as co-CEO – roughly $104 million, with 103.5 of that tied to equity, bonuses. I applaud the weighting of the compensation toward the success of the company, but imagine that having a co-CEO who is on a package at 25% of Jha’s will inevitably be a cause for turmoil.

With 32 teams in the NFL, you have to ask, just how many headsets would you need to sell to cover 125 million in CEO compensation?

I recently read Adrian Slywotzky’s The Art Of Profitability. Simply put, it’s one of the best business books I’ve ever read. In it, Slywotzky frames a 23 week tutorial in the various models of profitability between a hypothetical expert and his student. The models range from Multi-Component Profit, such as Coke – where products are sold in stores, restaurants and in machines, Blockbuster Profit – a model that Hollywood and the Pharmaceuticals live by, and Entrepreneurial Profit – where profit is spurned by a strong idea and entrepreneurial spirit, as in Honda and Wal-Mart. “The Art Of Profitability” has made me think a lot about the companies I’ve worked for, and what our clients need. Profitability is the main objective of business and Slywotzky proposes that some companies are just not that focused on it. I saw his point when I looked back at some of the companies I knew. I’ve worked for terrestrial and cable broadcasters, which have literally printed money in their net margins. On the other side, I’ve worked for startups who have chased the exit at the expense of profitability, while not seeing that the shortest path to profitability will ultimately enhance the exit proposition. I was reminded of the lessons of this book last week in YouTube Is Doomed (GOOG) Ben Wayne’s excellent post on SAI about Google’s  loss of $470 million per year on YouTube…. even the smartest companies struggle with profitability. I’ve now moved on to two of Slywotzky’s newer books – “How To Grow When Markets Don’t” and “The Upside”.