Motorola?s decision to spin Iridium off as a separate company was both a good decision and a bad decision for them to make. On the good side Motorola placed themselves in a low risk position in which they would reap the benefits of the many contracts that they would fulfill for Iridium. However, on the bad side, Iridium, as a company was inexperienced in handling such a massive undertaking that the start up and the success of this company would call for. And this knowledge could have been available had Motorola not cast them out into the market on their own.
Iridium?s target markets were composed of adventurers and high volume travelers who wanted to be able to maintain contact with the civilized world while they were out globe hopping. The market definitely had a need to be filled and it was fairly large in size but Iridium?s customer costs were just too high for the likings of potential customers.
Iridium Flare over New Steine - Unretouched
A Motorola 9500 phone
An Iridium satelliteAlso their manufacturers could not meet quality standards at first and this caused a massive delay in shipment of products (i.e. phones) to their distributors and customers. These are just a few of the problems that Iridium faced.
Another issue facing Iridium was the fact that its competitors could provide an equally matched service at tremendously lower costs, and they had the financing and knowledge/experience backing them up that was needed for success in this industry.
And it was this financing, knowledge and experience that help them to keep their development, variable and consumer cost in check, something Iridium could not do.