Motorola Solutions sees strong signs for video, 911 as LMR slows during COVID-19 pandemic

Motorola Solutions cited encouraging signs in the video-security and command-center software arenas while acknowledging a slowdown in new land-mobile-radio (LMR) business as enterprises and public-safety entities are impacted negatively by the COVID-19 pandemic, company officials said yesterday.

Motorola Solutions reported a 13% decrease in second-quarter revenues compared to last year. During the company’s second-quarter earnings call, CEO Greg Brown said business activity in April “pretty much seized up, and May wasn’t much better.” Customer engagements have improved some during June and July, but Motorola Solutions does not expect growth in either of the remaining fiscal quarters this year and projects an overall 7% decline in revenue for 2020, he said.

When asked to compare the COVID-19 pandemic to the global economic meltdown in 2008, Brown said that “in many regards, this is worse,” referencing the current situation. However, Brown said he believes Motorola Solutions is better positioned to handle the difficult circumstances, because company does not have to overcome problems associated faced by the cellular-focused businesses it owned in 2009.

“Today, we are in mission-critical public-safety networks,” Brown said during the earning call, which was webcast. “We’re in what I would call central-nervous-system, 911 command-center software, and we’re in all things video—fixed video, body-worn video, dash-cam video [and] license-plate recognition. So, the portfolio of the firm is much more critical, [offering solutions that are] need-to-have, as opposed to nice-to-have.

“Obviously, we’ve been impacted by COVID-19, but that disruption has been more about a disruption than a decline in overall demand. The long-term drivers still remain pretty sound. And even in this difficult year, we still expect to grow in command-center software. We expect to grow in video security. We expect to grow in land-mobile-radio services.”

In the LMR space, Motorola Solutions continues to see more opportunities to provide LMR services—for example, maintenance and network-monitoring contracts—to customers, with Brown noting the importance of such support to users faced with unique challenges associated with the pandemic.

“In our services business, the support that we’ve provided to our LMR customers during the pandemic has further validated the criticality of private, secure, mission-critical networks, and we continue to see customers investing in these networks for the long term,” Brown said.

But this view is not translating into increased sales in LMR products and systems at the moment. Brown reiterated the fact that Motorola Solutions is projecting a 35% decline—a $350 million decrease compared to last year—in its professional and commercial radio (PCR) business for 2020.

“Think about it [PCR] as kind of non-public safety radio sold to enterprise,” Brown said. “That’s been acutely affected, because it’s largely anchored in verticals like oil and gas, airline, travel hospitality. So that’s been the most pronounced decline.”

“We still expect the PCR business to be down approximately 35% for the full year 2020. So that device decline has been more acute.”

Declines in public-safety LMR product sales also exist, although they have not been as dramatic as those suffered in the PCR segment, Brown said.

“We talked about public-safety engagement being pushed to the right a bit in our inability to get with customers face-to-face [because of COVID-19],” Brown said. “It also impacted some deployments. But I would characterize that as more of a disruption than a decline in demand.

“Now, all in, when we think about North America public-safety land mobile radio, all-in—products and services—I think we contemplate a decline of about 7% for North America.”

One potentially LMR opportunity for Motorola Solutions is the desire for some cities to transition their systems to technologies that can be encrypted, Brown said.

“Given the congregation of large numbers of people in the cities, some of these customers have reached out in an effort to have us work with them to accelerate their public-safety systems to encrypt them and be more secure,” Brown said.

Brown did not mention any public-safety agencies specifically, but multiple media reports indicated that hackers were able to jam analog voice communications of Chicago police trying to control crowds during protests in the wake of George Floyd’s death in late May.

As for the impact of LTE offerings on LMR, there is “nothing really new,” Brown said.

“LTE is a complementary broadband network that complements mission-critical public safety and—in the U.S.—the P25 networks that are deployed,” he said. “So, no material change on that front.”

Brown noted that the Motorola Solutions software and services segment “continues to perform well,” growing at a 5% clip while improving operating margins. Highlighting the segment’s successes during the second quarter was a $26 million contract with the state of Utah for next-generation 911.

Another source of optimism within Motorola Solutions is the company’s position in the video markets, which is expected to be bolstered by the recent acquisitions of IndigoVision and Pelco.

Jack Molloy, Motorola Solutions’ executive vice president of products and sales, reiterated the company’s belief that it will grow its fixed-camera video revenues a three times the industry’s growth rate, although he said that market growth this year is now projected to increase less than the historical 5% rate.

Meanwhile, Molloy expressed optimism about Motorola Solutions opportunity to become a significant competitor in the body-worn-camera space that has been dominated by Axon in the past. As protesters nationwide call for greater transparency in police actions, Motorola Solutions has seen a significant increase in interest from potential customers about body-worn and in-car video solutions, he said.

“In May, we announced our V300, [a] new body-worn camera,” Molloy said. “We think we’ve improved the quality. And just in the last two weeks, we’ve come out with a body-worn-camera-as-a-service offering that the market had been asking for.

“We feel really good about where we stand with fixed video with adding incremental brand and coverage. And then, we love … our opportunities in body-worn, and we think the market wants alternatives in the body-worn camera space.