Two things that Sven-Christer Nilsson put great focus on during his first six months as CEO of Ericsson was redefining strategy and restructuring the group. Convergence was once again described as a central concept, but now it was convergence not only of technologies but also merging services and entire sectors. 

“In principle, IP affects all of Ericsson’s products”, Nilsson wrote in the annual report for 1998. The operators were facing the task of moving their traffic to the internet, first long-distance networks and then the access networks. His guess was that most telecommunication and data traffic would be using IP by 2005. “This is a reorganization that recalls the shift by operators from analog to digital.”

One area where Nilsson’s approach was put to the test included the acquisition of companies in the IT and computer fields. In 1997 Ericsson’s board had decided on what it called a ‘pearl necklace strategy’. Acquisitions were to take place only if they could be expected to provide substantial added value to the company’s core operation, telecom systems.

This justified Ericsson’s acquisition that same year of a large holding in the American company Juniper, “whose business idea was to compete with the market leader Cisco by offering better products” (Ramqvist). In 1998, another American company was bought out, ACC (Advanced Computer Communications), which was at the forefront in remote access, a technique for linking to the internet. On the other hand, in 1999 the board said no to the acquisition of yet another American company, Fore Systems, which specialized in ATM technology. This was acquired instead by Marconi for USD 4.5 billion – a purchase that was later to have catastrophic consequences for the buyer.


From the beginning of 1999, Ericsson’s operations were structured in three business divisions: network operator/service suppliers, consumer products and commercial solutions.

Ericsson had worked with services, in terms of repairs, since Lars Magnus’s day, and over the years Ericsson’s local companies had worked with services in many forms based on the needs of their respective markets. The company worked as an operator for the first time in Mexico in 1907. 

During the current reorganization, services were now collated into a single unit. Bert Nordberg was assigned to build up and coordinate the services operation.  

While Ramqvist had made do with an executive team of only four or five members, Nilsson extended it to 14.

An extensive program of cuts was also launched. The workforce of 104,000 was to be reduced by 11,000. Among those to go were the 600 employees left at the Norrköping factory. The main justification was that technological developments had continued to simplify or eliminate manufacturing processes. For instance the installation of an AXE, which had previously taken 12 weeks, could now be accomplished in one week with half the manpower.

Those made redundant this time were given extra long notice, active help from the employer to find new hobs and the opportunity to work for the staffing company Poolia.

Author: Svenolof Karlsson & Anders Lugn

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