Saved by the bell. In this case, the bell was the oil crisis caused by the October War of 1973. Unemployment, stagflation, economic crisis and uncertain times led to a stop for investments in many countries around the world. Ericsson, which with the AKE system that was the predecessor to AXE was planning a new generation of switching stations and had already lost its previously loyal customer in Australia to arch-rival ITT, was given a respite.
When investment picked up again, in 1977, it began with the deal of the century, and quite naturally it was a newly rich oil-producing country, Saudi Arabia, that was the buyer. Both the bidding process and the delivery were dramatic, with many points won by Ericsson. When the president of ITT said that Ericsson could not possibly deliver, and definitely not AXE, and when Ericsson then proceeded to do the impossible, these words came back to haunt the competitor. When the Australian PTT, whose choice of ITT in the first round had been such a harsh blow, now chose AXE, Ericsson was naturally strengthened. And the world was watching.
Put simply, it was AXE that moved Ericsson from a respectable position in the minor leagues among telecom suppliers to a major league player. When AXE was designed, the goal was to create a system that was so flexible that it could be used in the most disparate national networks, including the most archaic. Today, at the beginning of a new century, AXE has been delivered to 130 countries, making it the world’s best selling telephone system both in terms of the number of countries, the number of lines and total sales.
An important factor in Ericsson’s entry into the major league was that the company led the way in digital telephony, together with another company, Canada’s Northern Telecom, which was smaller and not a formidable competitor at that time. The fact that there were two suppliers launching new systems at the same time gave customers a sense of security. They had a choice. They were not being locked into a dead end by some bizarre invention. Together, the two competitors were able to educate and develop the market. This was necessary, since an important feature of digital systems was that the switching station and transmission, meaning cables and wires, became a single unit, which meant important economic and technical benefits. The supplier who was the first to be able to sell equipment that created a system that was better as a whole, could also more easily contribute greater parts of the whole.
A strong selling point was that the customer could add new functions at a later date. At the same time, there was no fixed menu of standard functions that a telephone station should be able to offer. One such function, which was a surprise even for the AXE system’s creators, was the ability to add mobile telephony, thus creating the foundation for Ericsson’s success in this area. Another selling point was that when the customer finally reached a decision on an investment, a new system could be built very quickly.
Author: Bengt-Arne Vedin
