Problems with mobile phones
The 1990s brought major successes for Ericsson mobile phones. During certain quarters, Ericsson had the largest global market share; in 1997, Ericsson, Nokia and Motorola had more or less equal shares of the global market. However, new models were being developed ever more rapidly and it was increasingly the customers who set the trends, not the manufacturers. It gradually became apparent that Ericsson’s culture with its lack of consumer contact did not offer the most fertile breeding ground.
Åsgård & Ellgren wrote in the late 1990s: “Ericsson is a company with an engineering focus that is outstanding when it comes to developing elegant technological solutions and then selling these systems to national telecommunications monopolies or, in today’s deregulated world, the major service providers. But trying to win over the end users, the people who use the phones, has never really been big.”
It was during Nilsson’s term as CEO that signs began to appear that Ericsson’s problems with mobile phones had to be due to one or more shortcomings in the company’s culture. Uddenfeldt says that no strong force ever emerged in the company that could have pushed design issues.
Moreover, the company’s credibility took a dent when Ramqvist was invited to appear as keynote speaker at the CeBIT telecom fair in Hanover in 1998 where he demonstrated Ericsson’s latest model, the T28, based on a new technological platform. Ramqvist created a lot of interest in the model, marketing it assertively on Wall Street and in other contexts.
Nils Rydbeck recounts: “Our entire mobile operation was based on the production in each ‘generation’ of a model that sold in large enough numbers to finance everything we did. But the T28 was not ready for production. And imprudently enough, production of the previous model had been terminated before the T28 was ready so there was a panic to get the new phone on to the market. Without a bestseller, we were losing huge sums every day.”
Everyone in management was concerned, not least Ramqvist after the great advances he had promised the stock exchange. Rydbeck describes how Ramqvist called him and in a fit of anger declared that it was unforgiveable to make him a “liar” in the eyes of the market.
But the T28 still suffered from serious flaws, Rydbeck says. “When the T28 was finally launched in September 1999, it sold brilliantly and it all looked as if we had a new bestseller. But unfortunately the phone had a flip-up cover that broke easily, and also a faulty signal amplifier. Both were difficult to repair. After that customers started to get tired of us, while at the same time, Nokia caught up with us and overtook us.”
Nokia had already made further technological progress and launched the first phones without external antennas. Ulf J. Johansson says: “That was the watershed. After that Ericsson never recovered where phones were concerned.” Ramqvist’s own comment is: “My recollection is that I made really sure the T28 would actually be ready for the market within a reasonable time. At that time I believe all the suppliers were announcing new models somewhat too early. But I would never have ignored the kind of warning that has been described. I was only gradually told how serious the problems were after CeBIT 1998.”
Author: Svenolof Karlsson & Anders Lugn
T28 with headset, 1998-1999
The Ericsson Communicator never went on sale. Analysis showed that the market was not mature.
Lars Ramqvist speaks before Swedens parliament.