In April 1876, Lars Magnus Ericsson opened an electro-mechanical workshop in a rented kitchen at Drottninggatan 15 in Stockholm.

Those who were familiar with Ericsson's cautious and deliberate approach to major projects have concluded that the project must have been on his mind for some time.

His physical assets were meager, consisting primarily of an instrument maker's pedal lathe.

His working capital was 1,000 kronor, borrowed from a Mrs. Maria Stromberg of Nygard, who must certainly qualify as one of the most perceptive Swedish investors of the century. His labor force was a single twelve-year-old assistant.

But, as Hemming Johansson has written: "Enormous capacity for work, tough energy, remarkable skill in the trade and extensive experience in the field he had made his own - combined with honesty and prudence in business matters - were the foundation stones on which Ericsson could base his activity." They proved to be quite adequate assets.

In America, Alexander Graham Bell had just received his first patents on the telephone. A great new era in communications was about to open.

In the beginning Ericsson was engaged mainly in the repair of telegraph instruments and other electrical devices. But he soon began to produce improved equipment of his own design. A notable example was a dial telegraph instrument for use in railway systems. He also designed a fire telegraph system for small communities that became the prototype of systems used at home and abroad for many decades.

Ericsson's reputation for quality work soon enabled him to obtain orders from a wide variety of public and private authorities in such fields as telegraphy, fire protection, police administration and rail transportation. Various companies within the Ericsson Group continue to function as supliers in these peripheral fields of telecommunications.

Not long after opening his workshop Ericsson brought in a former workmate from Oller's, Carl Johan Andersson, as his first and only partner. Andersson, who had also studied abroad with the assistance of Government grants, contributed 1,000 kronor to the enterprise which now became known formally as L.M. Ericsson & Co. Andersson continued as Ericsson's closest associate for many years, even after the partnership was later dissolved and the founder regained complete financial control.

Two signficant events in Ericsson's life occured in 1878. At the age of 32, he married Hilda Simonsson who became not only the mistress of his home but also an active colleague in business. For a number of years the winding of electromagnet reels with silk-insulated copper wire was entrusted to Mrs. Ericsson, at first working alone and later with the help of one or more assistants. It is said that even when confined to bed, Mrs. Ericsson continued her work with the winding machine propped on her knees. And Hemming Johansson reminds us that, in other matters also, Ericsson "benefitted by his wife's practical mind and wise counsel."

The second major event of 1878 was the delivery, during the month of November, of the first telehones of Ericsson's manufacture. American made instruments had been introduced in Sweden the previous year and some of them had already been in Ericsson's shop for repair. The experience thus gained, coupled with the studies Ericsson had undertaken after reading news accounts of Bell's invention, had enabled him to design and produce "servicable" instruments.

Other orders followed in close succession and, although the telephone continued to be regarded as a luxury, Ericsson intensified his efforts to improve his instruments and related equipment.

The "breakthrough" of telephony in Sweden occurred in 1880 when the American Bell Company, using American equipment, constructed the first telephone networks in Stockholm, Gothenburg, Malmo, Sundsvall and Soderhamn. The situation was critical for Ericsson. He stood to lose virtually all of his home market unless he and Andersson could demonstrate convincingly that their equipment was equal, if not superior to Bell's.

The showdown came the following year - 1881 - when the city of Gavle, on the Baltic coast, called for bids to supply a local telephone system. The Bell Company in Stockholm offered to install and operate a system for 200 kronor per subscriber per year, based on a minimum of 50 five-year subscriber contracts.

At this point a local entrepreneur entered the picture. Relying on Ericsson's engineereing and price estimates, he offered to install the system for 275 kronor per subscriber and thereafter to operate it for 56 kronor per subscriber per year. At the end of January instruments from Bell and Ericsson were set up in Gavle for comparitive testing. The testers certified that both functioned very well but that they considered Ericsson's telephones "simpler, stronger and more attractive."

The Gavle Exchange Association, which had responsibility for the final decision, nevertheless decided to call in a new jury of two telegraph experts and one technician. On February 15 the new inspectors reported Ericsson's telephone "to be better made, provided with a better ringing device and with a better designed and movable microphone..." Ten days later the bid on behalf of Ericsson's equipment was accepted with only minor modifications.

The victory over Bell at Gavle and later the same year at Bergen, Norway, were major milestones in the development of Ericsson's five-year-old enterprise. He had demonstrated that Swedish craftsmanship and Swedish technique could hold an equal footing with those of the largest company in the field. He had established a firm position in his home market and he had opened up the first long succession of markets outside Sweden. Both were momentous achievements.