Ericsson Radio Systems and the Kista spirit

When Svenska Radioaktiebolaget (SRA) in 1976 moved from its cramped offices to a new building on a field in Kista, it was not just a routine move. It laid the foundation for what would be called Sweden’s Silicon Valley, although at that time, mud was more common than silicon.

Ivar Ahlgren, who was president of SRA from 1961 to 1977, had established a decentralized organization free from bureaucracy that gave employees considerable freedom. He was succeeded as president by Åke Lundqvist, who was previously manager for the land mobile radio division and had experienced the strong growth of operations during the 1970s. Lundqvist saw the potential of radio communications like few others.

Because radio communications was not a large part of Ericsson’s business and SRA had moved to the other side of town, as seen from Ericsson’s head office at Telefonplan in the south of Stockholm, the company was allowed to live its own life out in Kista. A pioneering spirit emerged, and SRA became a center for experimentations with a cowboy atmosphere.

SRA’s role within Ericsson can also be seen as a reflection of a general trend within business. From the 1960s and onwards, it became increasingly common to divide operations into divisions. Special development companies were often formed for developing new products. These companies could often act very independently of the parent company. Ericsson’s experience from the jointly owned company Ellemtel and the development of the AXE systems was very positive, and now SRA was given more or less free reins with respect to radio. In this connection, it is worth noting that Ericsson was becoming increasingly aware that landline technologies would eventually decrease in importance.

New technology was advancing rapidly. The future of radio communications was not about military systems or communication radios for taxis. It was about mobile telephony. In 1975, the specifications for the new Nordic Mobile Telephony (NMT) system were completed. This was an event that would create completely new prerequisites for operations.

At first, SRA participated solely as a sub-contractor for NMT. But when mobile telephony began to gain momentum in the company, employees learned quickly. Equally important was Åke Lundqvist’s strategy in the late 1970s and 1980s, when he acquired a number of companies, such as Sonab, Nira, Magnetic and Radiosystem, that were important for SRA’s development.

- It was essential for us to acquire the knowledge and capacity required for continued expansion in mobile telephony, says Åke Lundqvist today.

The large order for AXE-switches from Saudi Arabia in 1978 eventually led to the first test of SRA’s strategy of expansion. Åke Lundqvist tells the story

- I had the idea to try and sell a mobile system to the Saudi PTT around 1978-79. Ericsson’s joint venture with Philips was working out fine and the cooperation with the Saudi PTT was very successful. At the same time, back in Sweden, work was progressing according to plan on the NMT-standard.
 
Åke Lundqvist took his idea to Björn Lundvall, at the time Chairman of the board of Ericsson. Lundvall liked what he heard and in turn presented the idea to the Saudi Minister of Communications when he arrived in Stockholm for a project meeting.

-We didn't have any hardware ready, but we did have a concept. In those days, we were used to selling equipment based on concepts, explains Åke Lundqvist.

And the concept was enough – of course Saudi Arabia wanted to buy a mobile telephone system. In the beginning Ericsson and Philips was supposed to share the order, but after long negotiations Ericsson delivered a system based entirely on the NMT-standard.

At about the same time as the NMT-system became operational in Saudi Arabia, the autumn of 1981, SRA began to sell complete system for mobile telephony, including Ericsson’s MTX-switch. And since the company manufactured systems it was considered sound strategy to manufacture mobile phones or terminals as well.

Manufacture of mobile phones within SRA had actually already begun in the 1950s with terminals for land mobile radio. Development of mobile phones for NMT, however, began in 1983, when Ericsson inaugurated the Mobile Phone Laboratory in Lund. The same year, SRA changed its name to Ericsson Radio Systems (ERA). After several years’ development work, the first modern mobile phone was launched in 1987.

Kista was not only a center for radio expertise and a pioneering spirit. When telecom monopolies began to be broken up during the 1980s, state-owned PTTs were not the only companies that were interested in mobile systems. There were also young and enthusiastic entrepreneurs who knew nothing about technology. These new customers required a new kind of marketing strategy that was lacking in much of the rest of Ericsson but was found in Kista.

- ERA found it easier to adapt to manufacturing of consumer products than the rest of the company. In part that was because we had sold radio sets, but primarily it was because of everything we had learned from the manufacture and sales of land mobile radio, says Åke Lundqvist.

Lars Ramqvist, who succeeded Åke Lundqvist as president of ERA, was part of this environment. Two years later, Lars Ramqvist became the first Ericsson president to be recruited from the radio side. He took the entrepreneurial spirit and the new marketing philosophy with him from Kista to Telefonplan.

Author: Text: Marika Ehrenkrona & Mats Wickman

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