1. Motorola Knowledge-Based Manufacturing Sonora Sourcing Case Study August 15, 2006 Wendy Vittori Motorola Inc., Embedded Communications Computing

2. Motorola – Embedded Communications Computing - Background The Situation The Solution Results Additional Information Agenda

3. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Embedded Communications Computing Our Position in MotorolaOur Products and Solutions Our Position in the IndustryOur Global Operations The Yankee Group Standards-Based Communications Servers for Telecommunications: Market Drivers, Inhibitors, Perceptions and Rankings January, 2006 “The highest ranked vendor by the TEMs in this study, Motorola has a comprehensive portfolio of open standards-based communications server offerings, which it delivers out of its Embedded Communications Computing business unit. Motorola has been a driving force in the telco industry’s evolution to standards-based communications servers…” Motorola Ranked #1  DRILL DOWN  DRILL DOWN  DRILL DOWN  DRILL DOWN

4. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. The Situation 1981 Motorola Microsystems Inception Today Renamed as Motorola Computer Group (MCG) 1988 2002 2003 2004 2005 CEM Manufacturing in China (Shanghai) Key decision factor: Low labor costs Requirements:  Extensive training to expedite knowledge and experience transfer  “Exact replica” of ECC’s Plant in Tempe Assessment of Shanghai Operations Results:  Late deliveries and decreasing product quality impact customer satisfaction  Rising production costs Main Causes:  ECC’s highly complex products required continuous engineering support  Customized products and short production runs increased costs  High manufacturing turnover rate  Time zone differences  Culture and language barriers

5. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. The Solution 1981 Renamed as Motorola Computer Group (MCG) 1988 2002 2005 CEM Manufacturing in China (Shanghai) Assessment of Shanghai Operations Transference of Operations to Nogales (Mexico) Critical Decision Factors  Our manufacturing process: High Mix – Low Volume Our manufacturing process: High Mix – Low Volume  Close working relationship between engineering centers and manufacturing site  Production close to customers and within same trade zone  Risk reduction through diversification Assessment of Manufacturing Alternatives Key Options:  Outsource manufacturing  Internal production: Tempe (AZ), Nogales (Sonora, Mexico), Asia Evaluation Criteria:  Internal Factors: Human resources, time zone compatibility, product complexity, cost  External Factors: Ease of imports and exports, ease of business operations, government incentives, access to education, infrastructure, and others Motorola Microsystems Inception Today2003 2004

6. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Results  Improvement in operational results, especially in product quality and TTM  Additional benefits expected from regional development initiatives:  Nogales Port of Entry -- Hours of Operation  Free and Secure Trade (FAST) Program  SENTRI Program  Nogales Arizona Development

7. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. To access the Motorola Case Study, please visit Tecnológico de Monterrey website http://www.gda.itesm.mx/cic/. After registering, access the Case Catalogue (Catálogo de Casos). The case can be found under the Information and Technology Systems (Sistemas de Información y Tecnología) section; it is available in both Spanish and English.http://www.gda.itesm.mx/cic/ For further information, please contact one of the following parties: Dr. Jorge A. González González Director del Centro Internacional de Casos Instituto para el Desarrollo Empresarial Tecnológico de Monterrey, Campus Guadalajara Tel.: 52 (33) 3669 3000, ext. 3908. Enlace intercampus: 80-432-3908. E-mail: jgonza@itesm.mx Additional Information Carola Venot-De-Suárez Strategic Planning Office: (602) 438-3437, E-mail: carola@motorola.comcarola@motorola.com Motorola Inc., Embedded Communications Computing 2900 S. Diablo Way, Tempe, AZ 85282 U.S.A.

8. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Backup Slides

9. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. The Future of Communications is Seamless Mobility The promise of converged communications Voice and data on multiple devices, delivered uninterrupted across multiple networks User experience will be transformed by new applications and the ability to connect to anyone, anytime, anywhere Motorola is enabling OEMs to increase market share by providing complete communications server solutions that accelerate time-to-revenue for seamless mobility applications

10. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Accelerating Development of Communications Server Ecosystem Leading the efforts to define and accelerate the adoption of communications servers through key industry associations ▪ Motorola founding member of Communications Platform Trade Association ▪ Premier member of Intel Communications Alliance Motorola Communications Server Alliance ▪ Validate 3 rd party products with Motorola’s communications servers Promoting standards-based technology to encourage third-party application development and create the next generation ecosystem

11. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Predictive Sourcing Shows how sourcing decisions affect core values to create competitive advantage Delivers both decreased costs and long-term growth Core Value and Differentiators Sourcing Methodology Business Strategy

12. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Four Steps To Predictive Sourcing Consider entire value chain Assess both internal and external elements Environmental Assessment Engineering throughout product lifecycle New, differentiating capabilities drives profit Cost-based competitive advantage is fleeting Avoid short-term savings that harm long-term advantage From sourcing through delivery Includes shipping, handling, quality, logistics management Core Competency Competitive Advantages Innovation Cost Considerations

13. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Drill Downs

14. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Communications Computing Solutions + 20 Years Leading Embedded Infrastructure Computing Computers we call “computers” Laptop, PC / Server Dell, HP, IBM Cellular / Handheld Motorola, Nokia HP, Palm, Sony Computer Industry Motorola Application-Enabling Platforms & Building Blocks Medical Imaging, Aero, Defense, Industrial Automation GE Medical Systems, Raytheon, Applied Materials Data Switching and Transaction Processing Networking, Telecomm, Storage Nokia, Alcatel, Lucent, Motorola, Nortel Embedded Infrastructure Signal and Image Processing RETURN 

15. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Software building blocks Enabling software that makes it easier to use and integrate our boards and platforms. Macrocomponents PMC, PrPMC, PTMC and AMC modules Board-level building blocks Computing and communication single- board computers and blades in VMEbus, CompactPCI, and AdvancedTCA form factors Application-Enabling Platforms Pre-integrated and pre-tested carrier-grade platform solutions Platform-level building blocks Carrier-grade platforms based on open standards + = + + Communications Computing Solutions Components RETURN 

16. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Loughborough, UK Tempe, AZ Group Headquarters Hyderabad, India Marlborough, MA Nogales, Mexico Embedded Communications Computing Global Operations Bangalore, India Munich, Germany ECC European Headquarters Sunnyvale, CA, USA RETURN 

17. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Motorola Business Structure * Aligning With Seamless Mobility * Does not include functional units (HR/Finance/Legal/Facilities/Security) or the CTO office Personal Communications Energy Systems Seamless Mobility Devices Cellular Networks MOTOwi4 Wireless Broadband iDEN Networks Network Services and Applications Management Commercial, Government and Industrial Solutions Global Relations and Resources Embedded Communications Computing Cable and Satellite Wireline Networks Connected Home Telecom Video iRadio Mobile Devices Connected Home Motorola, Inc. Ed Zander, Chairman and Chief Executive Officer Networks and Enterprise RETURN 

18. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. “The highest ranked vendor by the TEMs in this study, Motorola has a comprehensive portfolio of open standards-based communications server offerings, which it delivers out of its Embedded Communications Computing business unit. Motorola has been a driving force in the telco industry’s evolution to standards- based communications servers…” The Yankee Group Standards-Based Communications Servers for Telecommunications: Market Drivers, Inhibitors, Perceptions and Rankings January, 2006 Motorola Press Release March 22, 2006 Motorola Ranked #1 RETURN 

19. Motorola General Business Information, Embedded Communications Computing Overview, Q2/2006. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006. Production Automation Types Mix (Number of Components) Volume (Number of Products) Manual Methods Small Batch (Semi- Automation) Flexible Automation Mix Automation Mass Customization Low Medium High Low Medium High RETURN 