Networking

The fall of Iridium: A cautionary tale for big ticket IT projects

Regardless of the size of your IT project, dont be afraid to listen to other perspectives


Imagine for a minute that you’re in outer space, floating above the earth. From your vantage point, you can see the 66 satellites of the Iridium network circling the globe, each in a precise orbit, so that no part of the earth is uncovered. Suddenly, all the Iridium satellites fall out of their orbits and spiral toward the ground, burning up during re-entry.

In a few moments, they’re all gone. So are the people that kept the satellites aloft. All that’s left are the unpaid bills.

As you may have heard, Iridium LLC has asked a bankruptcy court to allow it to “deorbit” its satellite network. Broke, unable to find a buyer for its satellite-based mobile phone business, Iridium (and Motorola—its biggest investor) is unable to spend more money to keep the satellites aloft. If the court approves, Iridium will instruct the satellites to leave their orbits and burn up during re-entry.

While odds are you’ve never aspired to design and build a satellite network to provide universal mobile phone service, Iridium’s flameout has important lessons for everyone that proposes and builds a “big-ticket” IT project. Everyday, the same problems that laid Iridium low crop up in countless other projects. Here are the most important lessons from Iridium—learn from their costly (more than $5 billion) mistakes:
  • Don’t assume you can predict the future: From the beginning, Iridium knew that it was going to run up huge losses in building the system, since it would have to be almost complete before it could sign up its first customer. It was counting on a huge untapped market for universal mobile service. Analysts repeatedly warned that Iridium’s forecasts were too optimistic, but they were ignored.
  • Don’t plan too far in advance: Iridium was such a huge technical undertaking that it took longer to plan and implement than originally anticipated. By the time it was operational, conditions in the mobile market had changed. For one thing, the entrance of many new players in the cellular game had driven down prices, eroding Iridium’s margins before it completed its first call. For another thing, Iridium introduced its “brick” phones at the same time that traditional cellular and PCS vendors were introducing ever-smaller phones.
  • Don’t ignore customer needs: Looking back, it seems incredible that anyone would lend money to a company that relied on $3,000 telephones that were as thick as a brick to complete calls that cost up to $7 a minute. Iridium was a lot more successful at attracting capital than customers. While it raised more than $5 billion, Iridium currently has only 55,000 customers, less than half of what it needs to break even.
  • Don’t oversell your project: One of Iridium’s biggest problems was that it didn’t work that well. Customers complained that the reception was very poor inside buildings or in areas with tall buildings. Iridium was promoted as a “bullet proof” solution for mobile phone users: expensive, but always available. When Iridium couldn’t deliver on quality and reliability, customers rebelled at the price.
  • Don’t fall in love with your technology: When Iridium executives talked about their product, they invariably focused on the technology behind the project, more than the customer needs that technology was supposed to solve. While you have to know and appreciate the technology behind your project, you can’t fall in love with it. If you do, you can lose your sense of perspective—always a disaster in a big-ticket implementation.

Don’t be thick as a brick
More than anything else, Iridium is a warning against hubris, that pride which insists you know more than anyone else. No matter what the size of your IT project, don’t be afraid to listen to other perspectives. While it’s important to have a passion about a project, you can’t lose your sense of proportion. No IT project is an end in itself. It either solves a company or customer need, or it should go away.

Don’t lose your head. There’s one more important lesson to learn from the Iridium debacle: when things went south, the people who advocated and designed it were gone long before the satellites started falling out of the skies.

Bob Artner is Director of Community Content for TechRepublic. Personally, he’s glad that there are places where he can’t be reached via cell phone.

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