Motorola's satellite network cost $5 billion. It sold for $25 million.
In 1985, a Motorola engineer's wife could not reach her clients by cell phone from the Bahamas. He and two colleagues planned a network of 66 low-flying satellites, to reach almost anywhere. His bosses said no. Chairman Robert Galvin said yes.
Iridium launched on November 1, 1998, after more than $5 billion. The handset cost $3,000 and calls cost $3 to $8 a minute. The phone was the size of a brick and did not work inside buildings or moving cars.
By August 1999 it had 20,000 subscribers. Its loans required 52,000. On August 13 it filed for bankruptcy. "First we created a marvelous technological achievement. Then we asked how to make money on it," Iridium's interim chief said that month, as quoted in Organizational Dynamics.
Motorola prepared to bring the satellites down to burn up. In December 2000 a group led by Dan Colussy bought the network for about $25 million, backed by a two-year, $72 million Pentagon contract. Iridium's revenue in 2025 was $871.7 million.
It took 11 years to reach customers, and cell networks spread meanwhile. The original company owed $40 million a month in interest. The buyers paid about $25 million for the network.
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What the captions say
- This is the story of how Motorola's Iridium satellite network cost over $5 billion, then sold for about $25 million.
- It ranked among America's 20 largest bankruptcies in 1999. It began in 1985, when a Motorola engineer's wife could not call clients from the Bahamas.
- He and two colleagues planned 66 low-flying satellites, so a phone could call from almost anywhere.
- His bosses said no. Motorola's chairman, Robert Galvin, said yes.
- Motorola became the biggest partner in a new company, Iridium. Service took 11 years from the plan.
- On November 1, 1998, Al Gore made the first call. The phone cost $3,000.
- But it was the size of a brick, and it would not work inside moving cars or buildings.
- Iridium's chief had predicted 500,000 subscribers by the end of 1999. By April, there were 10,000.
- By August, Iridium had only 20,000 subscribers, short of the 52,000 its loans required. On Friday, August 13, 1999, it filed for bankruptcy.
- That month, Iridium's interim chief put it plainly. First we created a marvelous technological achievement. Then we asked how to make money on it.
- With no qualified buyer, Motorola prepared to bring the satellites down to burn up.
- Then former Pan Am president Dan Colussy's group, backed by a Pentagon contract, bought the network in December 2000, for about $25 million.
- In 2025, Iridium's revenue was about $872 million.
- And it all began with one engineer's wife, who could not reach her clients from the Bahamas.
