Bjurel notes that Wallenberg and Lundvall were undoubtedly flattered by the interest of IBM, with its enormous resources. Bjurel’s own reaction was to understand L.M. Ericsson’s desire to try to improve its competitiveness on the world market.

On the other hand, a merger of IBM and L.M. Ericsson – and the closure of Ellemtel – would have major consequences for Televerket.

On August 13, Sträng summoned Bjurel to a meeting. Bjurel was then able to inform him that Lundvall had guaranteed no job losses at Televerket’s factories – they would continue to manufacture IBM-L.M. Ericsson products under license and L.M. Ericsson was prepared to subcontract work.

The problem was that Televerket’s factories’ high labor costs made them less competitive. “Sträng immediately noted this as a significant factor. I mentioned to Sträng that Televerket’s factories did not have the same incentive to manufacture under license for L.M. Ericsson if Televerket had not been involved in the development work. Sträng ended our conversation by thumping his desk with both hands and saying ‘these were damned valuable opinions."

The contacts between L.M. Ericsson and IBM continued throughout the autumn of 1974. Sträng summoned Bjurel twice more. Bjurel was able to tell him that the union representing government employees would “launch a serious attack and criticize the government for a merger with a multinational.”

PROJECT WITH IBM ABANDONED

In November, Lundvall announced that the project with IBM had been abandoned. He reminded Bjurel of the solemn undertaking he had demanded of all involved: absolute secrecy, with nobody to disclose any information about the affair until 15 years had elapsed. This secrecy was rigidly maintained by all concerned, says Bjurel, “except Sträng, who informed a small group under a vow of silence.”

So the operations of Ellemtel continued without anyone there knowing about the threat. The first AXE went into commercial operation at Turku in Finland in October 1977 – the site briefly became a minor pilgrimage center for visitors studying the installation. Six months later, Turku was also the first to get a totally digital AXE exchange – which was still operating without problems when it was finally decommissioned in December 2007.

The complicated relationship with Ellemtel could be seen when L.M. Ericsson celebrated the completion of the first AXE. Only one or two people from Ellemtel were invited to what was otherwise a major inauguration. Many people at Ellemtel took this badly, Haug recalls.

At the beginning of the 1980s, it was clear that the AXE exchange was going to be one of L.M. Ericsson’s most important successes.

 

 

Author: Svenolof Karlsson & Anders Lugn

INAUGURATION OF AXE

Communications minister Ulf Adelsohn inaugurates the AXE in Ulriksdal and Sävedalen in 1980

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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