Ericsson’s and Televerket’s joint Ellemtel project had resulted in the enormously successful AXE; in 1987 the partners initiated a new project, AXE-N. N stands for "network". “The network itself was to be a machine,” as Åsgård & Ellgren describe it. AXE-N was intended to use ATM (Asynchronous Transfer Mode) technology to “construct national and international digital information highways for the communication of speech, data and various broadband services in packet-switched form” and expressed an engineering dream “about one single, universal system for all telecommunications”, according to Meurling & Jeans.
AXE-N was to all extents and purposes an Ericsson project undertaken at its own premises at Telefonplan with its partner, Televerket, playing a supporting role. AXE-N can also be compared to the idea that simultaneously began to take form in the early 1990s as the internet.
The AXE-N venture was to be the most expensive industrial project in Sweden after Saab’s JAS fighter. One calculation estimates that it cost Ericsson SEK 10 billion. The project has often been described as a total failure.
In 1994 Ericsson bought Teligruppen, Telia’s equipment-manufacturing units, which meant that all AXE production was transferred to Ericsson. The following year Ericsson bought Telia’s holding in Ellemtel. Shortly afterwards, the AXE-N project was terminated in traumatic circumstances. Elisabeth Armgarth wrote in Ericsson’s staff magazine Contact: “People fainted at the meetings, some wept while others displayed no reaction at all; they appeared to be totally unmoved.”
Ericsson admittedly benefited from everything that had been learnt in the work on AXE-N, “but the same knowledge could probably have been acquired at a lower cost” as Meurling & Jeans put it. Ulf J. Johansson is somewhat blunter: “Many billions were invested wrongly. The project should been ended much earlier.”
The economy began to pick up gradually during the 1990s. But much had changed since the 1980s – politically as well.
A new Social Democrat government took power in Sweden in 1994 and with it a new finance minister, Göran Persson, later to become prime minister. He implemented an extensive reform program that trampled on Social Democrat toes.
The following year Sweden, together with Finland and Austria, joined the European Community, something that would have been inconceivable during the 1980s and which even now did not enjoy overwhelming popular support.
Another important trend was “quarterly-report capitalism”. Pressure on corporate management had begun to increase during the 1980s. Managers were supposed to focus on the interests of the owners, earning more money than before in less time. With an entire population owning shares, through their pension investments at least, interest in companies and their share prices was rising.
The media approach to the stock exchange also changed. Quarterly-report figures were seen as being of interest for a welfare state such as Sweden. On the other hand, news coverage was not always based on the facts, and sometimes was naïve. What makes share prices rise and fall? Journalists and analysts ventured into virgin territory where everything was possible.
And everyone flocked to Ericsson, a company that obviously knew what it was doing where business and finance were concerned.
Author: Svenolof Karlsson & Anders Lugn