At the end of the 1960s, L.M. Ericsson and Televerket were both working on developing computer-controlled exchanges. But the work was taking longer than planned for both of them and costs soon raced past the budgets.

They were running short of time. Bjurel records: “The whole world was talking about the coming of electronics. There was almost panic at L.M. Ericsson. Nobody knew how far competitors had come and there was no competitive solution in sight.” He describes Björn Lundvall as being “under enormous pressure.” On several occasions Bjurel proposed the idea that he and his colleagues had of a joint development company owned by Televerket and L.M. Ericsson. In August 1969, Lundvall visited Bjurel in Farsta.

In Bjurel’s words: “He (Lundvall) was more or less desperate about the situation. His conclusion was that we should discuss the situation as soon as possible with [the chairman of L.M. Ericsson’s board] Marcus Wallenberg.

“On September 2, we set off for Wallenberg’s office. Wallenberg offered us lunch, consisting of a starter – prawns – and a steak. During the starter, he explained that he already knew why we had come. He urged Lundvall to present the pros and cons of forming a development company together with the government.

Lundberg, who obviously had enormous respect for Wallenberg, was very nervous as he presented these points, which must have taken ten minutes. His phrasing was very diplomatic. It may be that Lundvall did not know what Wallenberg felt on this issue. Then it was my turn. I was, after all, not dependent on Wallenberg in any way and so I did not have to be as diplomatic.

A JOINT COMPANY

“After we had spoken, Wallenberg concluded: ‘It is quite obvious that the advantages of a joint development company far outweigh the drawbacks. We’ll form a joint company.’ So he gave the go-ahead for the formation of the company and asked me to get the government’s approval without delay – a request I happily and successfully complied with.”

Bertil Thorngren, who was responsible for group planning at Televerket/Telia for 20 years and who served under Bjurel for a few years, says the personal chemistry between Bjurel and Lundvall worked exceptionally well.

Ellemtel Utvecklings AB was established in May 1970 as a company owned jointly by L.M. Ericsson and Televerket. Over the following year both companies focused on formulating specifications for the joint exchange. It was a meeting of two worlds. L.M. Ericsson’s main focus was what international customers wanted; Televerket needed the new exchange to be designed to suit the future operations of its network.

But nobody knew what demands the future would bring. All that was certain was that the construction needed to be adaptable to whatever it was required to do. 

Once they realized this, they found the solution: modular construction. The exchange needed an architecture that meant it could be installed in different sizes and adapted to different needs. It had to be simple to manage in every way: to manufacture, to install, to document, to maintain. It also had to be possible to replace electromechanical solutions with electronic ones without altering the system structure.

THE ENTIRE RESEARCH BUDGET

But it was also simple to forecast that the project would be enormous, demanding hundreds of thousands of work-hours. Several of L.M. Ericsson’s competitors had begun to market computer-controlled exchanges. The decision was “painfully difficult” for Lundvall, to quote Meurling & Jeans, but in May 1972 it was made: L.M. Ericsson was going to invest more or less its entire research budget in Ellemtel and end development of the AKE-13.

Bengt-Gunnar Magnusson, who had transferred from Televerket to L.M. Ericsson, became head of what was known as Department X at Ellemtel, where the AXE was to be developed (the X stood for selector flexibility). Most of the work on AXE was completed over a four-year period, 1972–76, without a single manager being replaced: the team was left to get on with it, and only one person resigned. More than half the staff initially recruited to Ellemtel came from Televerket’s operations. In the end L.M. Ericsson financed three-quarters of the project.

Author: Svenolof Karlsson & Anders Lugn

ELLEMTEL CELEBRATING ITS 20TH ANNIVERSARY

Ericsson historian John Meurling, Televerket director-general Bertil Bjurel and the head technician for AXE, Bengt-Gunnar Magnusson.

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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