Ericsson

(lit. "Telephone Stock Company of LM Ericsson"), commonly known as Ericsson, is a Swedish multinational networking and telecommunications company headquartered in Stockholm. The company sells infrastructure, software, and services in information and communications technology for telecommunications service providers and enterprises, including, among others, 3G, 4G, and 5G equipment, and Internet Protocol (IP) and optical transport systems. The company employs around 100,000 people and operates in more than 180 countries. Ericsson has over 57,000 granted patents.

Ericsson has been a major contributor to the development of the telecommunications industry and is one of the leaders in 5G.

The company was founded in 1876 by Lars Magnus Ericsson and is jointly controlled by the Wallenberg family through its holding company Investor AB, and the universal bank Handelsbanken through its investment company Industrivärden. The Wallenbergs and the Handelsbanken sphere acquired their voting-strong A-shares, and thus the control of Ericsson, after the fall of the Kreuger empire in the early 1930s.

Ericsson is the inventor of Bluetooth technology.

History

Foundation

Lars Magnus Ericsson began his association with telephones in his youth as an instrument maker. He worked for a firm that made telegraph equipment for the Swedish government agency Telegrafverket. In 1876, at the age of 30, he started a telegraph repair shop with help from his friend Carl Johan Andersson in central Stockholm and repaired foreign-made telephones. In 1878 Ericsson began making and selling his telephone equipment. His telephones were not technically innovative. In 1878 he agreed to supply telephones and switchboards to Sweden's first telecommunications operating company, Stockholms Allmänna Telefonaktiebolag.

International expansion

As production grew in the late 1890s, and the Swedish market seemed to be reaching saturation, Ericsson expanded into foreign markets through a number of agents. The UK (Ericsson Telephones Ltd.) and Russia were early markets, where factories were later established to improve the chances of gaining local contracts and augment the output of the Swedish factory. In the UK, the National Telephone Company was a major customer; by 1897 sold 28% of its output in the UK. The Nordic countries were also Ericsson customers; they were encouraged by the growth of telephone services in Sweden.

Other countries and colonies were exposed to Ericsson products through the influence of their parent countries. These included Australia and New Zealand, which by the late 1890s were Ericsson's largest non-European markets. Mass production techniques were now firmly established; telephones were losing some of their ornate finish and decoration.

Despite their successes elsewhere, Ericsson did not make significant sales in the United States. The Bell Group, Kellogg and Automatic Electric dominated the market. Ericsson eventually sold its U.S. assets. Sales in Mexico led to inroads into South American countries. South Africa and China were also generating significant sales. With his company now multinational, Lars Ericsson stepped down from the company in 1901.

Automatic equipment

Ericsson ignored the growth of automatic telephony in the United States and concentrated on manual exchange designs. Their first dial telephone was produced in 1921, although sales of the early automatic switching systems were slow until the equipment had proven itself on the world's markets. Telephones of this period had a simpler design and finish, and many of the early automatic desk telephones in Ericsson's catalogues were magneto styles with a dial on the front and appropriate changes to the electronics. Elaborate decals decorated the cases. World War I, the subsequent Great Depression and the loss of its Russian assets after the Revolution slowed the company's development while sales to other countries fell by about half.

Shareholding changes

The acquisition of other telecommunications companies put pressure on Ericsson's finances; in 1925, Karl Fredric Wincrantz took control of the company by acquiring most of the shares. Wincrantz was partly funded by Ivar Kreuger, an international financier. The company was renamed ''Telefonaktiebolaget L M Ericsson''. Kreuger started showing interest in the company, being a major owner of Wincrantz holding companies.

Wallenberg era begins

Ericsson was saved from bankruptcy and closure with the help of banks including Stockholms Enskilda Bank (now Skandinaviska Enskilda Banken) and other Swedish investment banks controlled by the Wallenberg family, and some Swedish government backing. Marcus Wallenberg Jr. negotiated a deal with several Swedish banks to rebuild Ericsson financially. The banks gradually increased their possession of LM Ericsson "A" shares, while ITT was still the largest shareholder. In 1960, the Wallenberg family bought ITT's shares in Ericsson, and has since controlled the company.

Market development

In the 1920s and 1930s, the world telephone markets were being organized and stabilized by many governments. The fragmented town-by-town systems serviced by small, private companies that had evolved were integrated and offered for lease to a single company. Ericsson obtained some leases, which represented further sales of equipment to the growing networks. Ericsson got almost one-third of its sales under the control of its telephone operating companies.

Further development

Ericsson introduced the world's first fully automatic mobile telephone system, MTA, in 1956. It released one of the world's first hands-free speaker telephones in the 1960s. In 1954, it released the Ericofon. Ericsson crossbar switching equipment was used in telephone administrations in many countries. In 1983 the company introduced the ERIPAX suite of network products and services.

Emergence of the Internet (1995–2003)

In the 1990s, during the emergence of the Internet, Ericsson was regarded as slow to realize its potential and falling behind in the area of IP technology. But the company had established an Internet project in 1995 called Infocom Systems to exploit opportunities leading from fixed-line telecom and IT. CEO Lars Ramqvist wrote in the 1996 annual report that in all three of its business areas – Mobile Telephones and Terminals, Mobile Systems, and Infocom Systems – "we will expand our operations as they relate to customer service and Internet Protocol (IP) access (Internet and intranet access)".

The growth of GSM, which became a ''de facto'' world standard, combined with Ericsson's other mobile standards, such as D-AMPS and PDC, meant that by the start of 1997, Ericsson had an estimated 40% share of the world's mobile market, with around 54 million subscribers. There were also around 188 million AXE lines in place or on order in 117 countries. Telecom and chip companies worked in the 1990s to provide Internet access over mobile telephones. Early versions such as Wireless Application Protocol (WAP) used packet data over the existing GSM network, in a form known as GPRS (General Packet Radio Service), but these services, known as 2.5G, were fairly rudimentary and did not achieve much mass-market success.

The International Telecommunication Union (ITU) had prepared the specifications for a 3G mobile service that included several technologies. Ericsson pushed hard for the WCDMA (wideband CDMA) form based on the GSM standard and began testing it in 1996. Japanese operator NTT Docomo signed deals to partner with Ericsson and Nokia, who came together in 1997 to support WCDMA over rival standards. DoCoMo was the first operator with a live 3G network, using its own version of WCDMA called FOMA. Ericsson was a significant developer of the WCDMA version of GSM, while US-based chip developer Qualcomm promoted the alternative system CDMA2000, building on the popularity of CDMA in the US market. This resulted in a patent infringement lawsuit that was resolved in March 1999 when the two companies agreed to pay each other royalties for the use of their respective technologies and Ericsson purchased Qualcomm's wireless infrastructure business and some R&D resources.

Ericsson issued a profit warning in March 2001. Over the coming year, sales to operators halved. Mobile telephones became a burden; the company's telephones unit made a loss of SEK 24 billion in 2000. A fire in a Philips chip factory in New Mexico in March 2000 caused severe disruption to Ericsson's phone production, dealing a ''coup de grâce'' to Ericsson's mobile phone hopes. Mobile phones would be spun off into a joint venture with Sony, Sony Ericsson Mobile Communications, in October 2001.
Ericsson launched several rounds of restructuring, refinancing and job-cutting; during 2001, staff numbers fell from 107,000 to 85,000. A further 20,000 went the next year, and 11,000 more in 2003. A new rights issue raised SEK 30 billion to keep the company afloat. The company had survived as mobile Internet started growing. With record profits, it was in better shape than many of its competitors.

Rebuilding and growing (2003–2018)

The emergence of full mobile Internet began a period of growth for the global telecom industry, including Ericsson. After the launch of 3G services in 2003, people started to access the Internet using their telephones.

Ericsson was working on ways to improve WCDMA as operators were buying and rolling it out; it was the first generation of 3G access. New advances included IMS (IP Multimedia Subsystem) and the next evolution of WCDMA, called High-Speed Packet Access (HSPA). It was initially deployed in the download version called HSDPA; the technology spread from the first test calls in the US in late 2005 to 59 commercial networks in September 2006. HSPA would provide the world's first mobile broadband.

In July 2016, Hans Vestberg stepped down as Ericsson's CEO after heading the company for six years. Jan Frykhammar, who has been working for the company since 1991 will be stepping in as interim CEO as Ericsson searches for a full-time replacement. On 16 January 2017, following Ericsson's announcement on 26 October 2016, new CEO Börje Ekholm started and interim CEO Jan Frykhammar stepped down the following day.

In June 2018, Ericsson, Inc. and Ericsson AB have agreed to pay $145,893 to settle potential civil liability for an apparent violation of the International Emergency Economic Powers Act (IEEPA) and the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (SSR).1

Acquisitions and cooperation

Around 2000, companies and governments began to push for standards for mobile Internet. In May 2000, the European Commission created the Wireless Strategic Initiative, a consortium of four telecommunications suppliers in Europe – Ericsson, Nokia, Alcatel (France) and Siemens (Germany) – to develop and test new prototypes for advanced wireless communications systems. Later that year, the consortium partners invited other companies to join them in a Wireless World Research Forum in 2001. In December 1999, Microsoft
and Ericsson announced a strategic partnership to combine the former's web browser and server software with the latter's mobile-internet technologies. In 2000, the Dot-com bubble burst with marked economic implications for Sweden. Ericsson, the world's largest producer of mobile telecommunications equipment, shed thousands of jobs, as did the country's Internet consulting firms and dot-com start-ups. In the same year, Intel, the world's largest semiconductor chip manufacturer, signed a $1.5 billion deal to supply flash memory to Ericsson over the next three years.

The short-lived joint venture called Ericsson Microsoft Mobile Venture, owned 70/30 percent by Ericsson and Microsoft, respectively, ended in October 2001 when Ericsson announced it would absorb the former joint venture and adopt a licensing agreement with Microsoft instead. The same month, Ericsson announced the launch of Sony Ericsson, a joint venture mobile telephone business, together with Sony. Sony Ericsson remained in operation until February 2012, when Sony bought out Ericsson's share; Ericsson said it wanted to focus on the global wireless market as a whole.

Lower stock prices and job losses affected many telecommunications companies in 2001. The major equipment manufacturers – Motorola (U.S.), Lucent Technologies (U.S.), Cisco Systems (U.S.), Marconi (UK), Siemens (Germany), Nokia (Finland), as well as Ericsson – all announced job cuts in their home countries and subsidiaries around the world. Ericsson's workforce worldwide fell during 2001 from 107,000 to 85,000.

In September 2001, Ericsson purchased the remaining shares in EHPT from Hewlett Packard. Founded in 1993, Ericsson Hewlett Packard Telecom (EHPT) was a joint venture made up of 60% Ericsson interests and 40% Hewlett-Packard interests.

In 2002, ICT investor losses topped $2 trillion and share prices fell by 95% until August that year. More than half a million people lost their jobs in the global telecom industry over the two years. The collapse of U.S. carrier WorldCom, with more than $107 billion in assets, was the biggest in U.S. history. The sector's problems caused bankruptcies and job losses, and led to changes in the leadership of several major companies. Ericsson made 20,000 more staff redundant and raised about $3 billion from its shareholders. In June 2002, Infineon Technologies (then the sixth-largest semiconductor supplier and a subsidiary of Siemens) bought Ericsson's microelectronics unit for $400 million.

Ericsson was an official backer in the 2005 launch of the .mobi top-level domain created specifically for the mobile internet.

Co-operation with Hewlett-Packard did not end with EHPT; in 2003 Ericsson outsourced its IT to HP, which included Managed Services, Help Desk Support, Data Center Operations, and HP Utility Data Center. The contract was extended in 2008. In October 2005, Ericsson acquired the bulk of the troubled UK telecommunications manufacturer Marconi Company, including its brand name that dates back to the creation of the original Marconi Company by the "father of radio" Guglielmo Marconi. In September 2006, Ericsson sold the greater part of its defense business Ericsson Microwave Systems, which mainly produced sensor and radar systems, to Saab AB, which renamed the company to Saab Microwave Systems.

In 2007, Ericsson acquired carrier edge-router maker Redback Networks, and then Entrisphere, a US-based company providing fiber-access technology. In September 2007, Ericsson acquired an 84% interest in German customer-care and billing software firm LHS, a stake later r