The Rise and Fall of Iridium

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Business Information System II

The Rise and Fall of Iridium


1. Who was to blame for Iridium 's failure? Why? At what point could you have known Iridium would fail?

2. What is your evaluation of Iridium 's system design? What impact did the choices that were made have on subsequent evolution of the venture?

3. What is your evaluation of Iridium 's organizational design? What changes could you have made to increase the probability of Iridium 's success?

Q1. In the case of Iridium several parties are to blame for the failure. They are:

Dr. Edward Staiano the former CEO of Iridium was responsible for Iridium 's development in a significant way. When he came from Motorola, the company offered him stock options besides his fixed
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This lead to significantly increasing costs (about 5 $ billion ). Because Iridium needed such a great number of satellites they developed assembly lines that allowed them to produce satellites at one tenth of the original production costs and made it possible to finish a new satellite every four and a half days.

Handsets The Iridium phones didn 't need to be as big as they would have been with GEO satellite but still had an enormous size [5], which made it really hard to market them.Furthermore the long antenna had to be pointed directly and in an open-sight way at the satellites and according to that the phones didn 't work in closed buildings, moving cars or undergrounds. These facts didn 't exactly provide the kind of flexibility that was needed by the potential target group, traveling business people. The handsets were planned to cost 3000 $ with a 2-8 $ per minute calling fee , this was a lot more expensive than cellular telephones.

Competing technologies With the rapid and unexpected developement of the cellular network, the Iridium technology became obsolete in areas covered by terrestrial mobile telephony. Although Iridium offered a GSM service for roaming into cellular networks, it was still more expensive than the regular cellular charge, so the target group shrank to people who were in the few regions not covered
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