The dream behind Ericsson Information System (EIS), eventually became a nightmare. The concept had many sound elements but the complete convergence it envisioned seemed impossible. “We had constant problems with a lack of components for production. For example, we did not have a cross-checked Ericsson inventory list for the newly acquired companies Facit and Datasaab. We could not rely on the manufacturing forecasts from the component suppliers, and that led unavoidably to problems when we were to deliver to the end customer,” says Roland Guillou, who worked with production projects for EIS in the 1980s.
Another difficulty was the strategy shift that followed when IBM’s mainframes began to be replaced by PCs. “The corporate culture at Facit, Ericsson and Datasaab did not match, and the production development and manufacturing standards were too different. As sales forecasts for EIS products increased, so did the delivery problems,” says Guillou.
Björn Svedberg finally concluded that EIS was on the wrong track and should be phased out. EIS CEO Stig Larsson, however, disagreed. Svedberg then initiated a strategic project to be undertaken by Lars Ramqvist, who had been attached to the group’s central management in 1983 to undertake strategic analysis and was appointed head of Ericsson’s component company, Rifa, in 1984. Ramqvist’s project resulted in a core-business concept that the board eventually adopted. This concept did not include production of its own computer terminals.
Could EIS be sold off? Ericsson put out feelers in many directions, including towards Nokia, but found no interest. However, as the authors Åsgård & Ellgren put it: “One day, however, Werthén rang the head of Nokia, Kari Kairamo, and after talking for about 15 minutes, he put the phone down and shouted: ‘It’s sold, my friends! It’s sold!’”
NO FURTHER LOSSES
The purchase agreement was negotiated between Svedberg and Nokia’s president, Simo Vuorilehto. Svedberg recalls: “I was able to walk into the boardroom and announce that thanks to the deal we would not have to reckon with further losses.” Nokia took over Ericsson Information Systems from the beginning of 1988.
Kairamo was in close contact with Pehr G. Gyllenhammar, head of Volvo, the largest Nordic industrial group, who says: “This was based on the feeling that Kari and I had that there was a lot we could do in Europe.” An alliance with Nokia would have suited Gyllenhammar’s then strategy of turning Volvo into an industrial holding company.
Business historian Janne Salonen put it so: “Gyllenhammar would hardly have had any problems in getting it past Volvo’s board. But the initiative made no progress at Nokia. One day in November, the last time they met, Kairamo was very depressed and said: ‘They [Tiivola and Lassila, who represented the two largest owners] don’t want to’. But Kairamo had obviously only talked to Tiivola, who had promised in his turn to talk to Lassila but clearly failed to do so.”
Author: Svenolof Karlsson & Anders Lugn