Mobile telephony is often equated with the phones themselves. Studying Ericsson's sales, however, provides a different perspective. By mid-2000, sales were distributed among different areas as follows:
Network operators 65 percent
Consumer products 25 percent
Business solutions 5 percent
Other areas 5 percent
Sales to network operators consist of both fixed and wireless systems for operators in markets all over the world. For mobile systems, this also means sales of different types of systems according to the various standards used for cellular telephony.
Wireless systems are thus the infrastructure that operators in various markets use to offer voice and other services. This infrastructure may include many other components, including various combinations of wireless and fixed technology, switching systems, the building of networks of various types and sizes, cell planning according to the cell concept, etc.
This is not where this part of Ericsson's history began, however. In the late 1970s, it was not at all self-evident that the company should work with mobile systems. This was particularly evident in the company's response when the pace of development increased.
In 1978, when construction of the Nordic NMT system was about to begin, Ericsson was awarded a contract to supply MTX switches. Ericsson, however, had not yet developed a base station or acquired expertise in cell planning.
Instead, two other orders paved the way for Ericsson to become a systems supplier with the capacity to deliver complete systems.
The large Saudi Arabian contract, which was delivered in partnership with Philips, was expanded in 1979 to include a mobile telephone system. After a number of discussions, the parties agreed to use the NMT standard and that Ericsson would supply the entire system, since Ericsson by this time had integrated expertise in building base stations within SRA through company acquisitions.
In the early 1980s, a mobile telephone network was to be built in the Netherlands. Also on this occasion, Ericsson was well positioned to supply MTX switches, while Motorola was expected to supply base stations and other radio equipment. One of Motorola's arguments against Ericsson was that the company had no cell planning expertise.
The contract almost ended in an alliance with Motorola, but Åke Lundquist at SRA and Hans Flinck at the X division that made the switches, had different plans. They acquired cell planning expertise and insisted that Ericsson either supplied the entire system, including switches, base stations and cell planning, or nothing at all. The entire contract went to Ericsson, but the most important result was that Ericsson thus became a total systems supplier in mobile telephony. All or nothing!
Since then, countless contracts in many different markets have allowed Ericsson to develop expertise in all aspects of mobile systems. Perhaps even more important, the company was able to adapt to all the different standards used around the world. In the alphabet soup of TACS, TDMA, PDC and GSM, it is worth remembering NMT, Saudi Arabia and the Netherlands. That was where it all started.
Author: Pontus Staunstrup
Åke Lundqvist, president of SRA/ERA 1977-1988, president of Ericsson GE Mobile Communications 1989-1994.
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