Ericsson and mobile telephony

Demonstration of base station.

Ericsson's entry in mobile telephony began in earnest with the AXE system. Thanks to AXE, which was the world's first completely digital system, Ericsson had a strong position when contracts for the first mobile systems were awarded in the late 1970s. The Nordic countries all chose a version of the AXE called MTX for their NMT networks, as did Saudi Arabia.

During the 1980s, deregulation of the telecom market began in many countries. The old state-owned monopolies were replaced or supplemented by private alternatives. Deregulation paved the way for mobile telephony. Suddenly there were a large number of operators who had received licenses for mobile networks and wanted to make a profit.

In 1981, Ericsson was forced to make a choice. Either the company could be satisfied with supplying switches for mobile systems, or it could try to acquire expertise in producing and supplying complete systems. The issue was driven to a decisive point during a meeting in Amsterdam, and a decision was taken that Ericsson would sell complete systems.

The many markets that were opened by mobile telephony led to the development of several different standards. For Ericsson, this meant learning to play what Lars Ramqvist called "the standards game". This game was played at several levels. Ericsson participates in the development of standards through its own research and development. In addition, the company influences existing standards through innovations and by developing new services.

The decision to manufacture mobile phones was almost an afterthought. If the company was going to sell systems, then it might as well make the phones, too. Locating phone development in Lund, however, was a wise decision. Because it was far from the head office in Stockholm, Lund was able to develop the first models with little interference. At this time, in the early 1980s, it was not at all certain that Ericsson should produce consumer products. Other Ericsson units viewed Ericsson Radio Systems' (ERA) operations, and above all its marketing, with skepticism. Could an Ericsson unit be allowed to do such things' wondered many, including members of corporate management.

Mobile systems became a core business as early as 1986, but it was not until the 1990s that mobile phones achieved this status. That it took this long was probably due to the fact that Ericsson had long been a systems supplier for switches and telephones whose customers were primarily the authorities who dominated the telecommunications industry. One country, one customer was not an unusual situation, thus limiting the need for marketing.

With mobile systems and phones, however, the situation was the opposite. These were products for operators and consumers in a rapidly changing market in which the brand and the company's expertise must constantly be promoted, and it took Ericsson some time to realize this.

Author: Pontus Staunstrup


Advertisement for GSM mobile systems.


Left to right; NH 72, HotLine Combi, NH 51 and in front NM 10.

© Telefonaktiebolaget LM Ericsson and Centre for Business History

Contact info/About the site