KTH ROYAL INSTITUTEOF TECHNOLOGY

From research to business in the Swedish ICT SectorEric GiertzProfessor, Industrial Economics and Management, KTHFounder & Chairman, KTH Executive School

LUCAS-dagen, Lund 2016-10-20

Reports

• Vinnova analys 2013:07• Företag inom informations- och kommunikationsteknik

i Sverige 2007-2011

• Vinnova analys 2015:06:• Small and beautiful – The ICT success of Finland & Sweden

• Vinnova analys 20016:07• Svensk konsultsektor i ny belysning

160000Employees inICTcompanies inSwedenindifferentbusinesslogics

Software

NetServices

ServiceandMaintenanceofICTsystems

ICToperations

ICTconsultancyfirms(Commercialsystems)

ICTconsultancyfirms(R&Drelated)

Hardware(Components)

Hardware(Completeproductsandsystems)

Internet related Business models

A Swedish gaming industry

ICT Consultancy companies

Understanding the Swedish saga throughan historical exposé

• The foundation was build by very few strong actors!

• The turbulance around 2000 created new conditions

• Today we have an entrepreneurial and dynamicindustry with many different actors!

KTH

ASEAVattenfall

EricssonTeleverket

SaabDefence

ASEASJ(rail)

PrivateCompanies

PublicPartners

Government

EXPORT

”Developingcouples”Fourpartiesplanfromacornstooaktrees

CloseGovernment–IndustryCooperation

ASwedishcomputerindustryisborn– 1948ThepublicagencyMMNisestablishedatKTH– BESKiscompletedin1953(theUS,France,BritainandSweden)– SARAin1957(Saab)– D21in1962– Facit leavescomputersin1963– Anewdevelopmentcouple12,000mainframecomputers(failed)

Ericsson +Televerket =Averytightcouple– 1970Ellemtel – ajointventureisestablished– Jointdevelopmentofelectronicandautomatedswitching– 1976Televerket putsAXEinoperationinSödertälje– 1978Ellemtel transfersAXEcompetencetoEricsson

Gov’twasinvolvedinICTrestructuring

Datasaab isestablished– Stansaab established1971(SRT,SaabScania,SUAB)– Alfaskop isahugesuccess– SRTleavesin1973– 1978Stansaab &SaabScaniacomputerdivision=Datasaab

Astate-ownedPCindustryisborn– January1978– ameetinginLinköping– August1978ABC80isintroduced– 1979Governmenttakesover

Ericsson andNokia takesover

NMT &GSMopensworldmarketforEricsson

ANewerastartsinthe1990th

• Televerket &Ericsson aredivorced– Liberalizationin1993– EricssontakesoverTeli (1994)andEllemtel(1995)

– Telia ABmakesIPO2000– Telia acquiresSonera in2002

• Ericsson readytoconquertheworld!– Ericsson outsourcinglate1990s– Ericsson ontopMarch2000

1,84,0

1,6

3,1

EricssonofSwedishGDP NokiaofFinnishGDP

Direct impact

Indirect impact(sub-contracting&partnering)

%of GDPin 2000

WORLDRECORD!?

38.2%

28,742,1

9,6

15,1

SwedishICTSector FinnishICTSector

DirectshareofEricsson/Nokia

Share ofICTSector ValueAdded in2000,%Other ICTfirms’share

57.2%

61,8 42,8

Anexplosionin2001

• Ericsson survivedwhenbubbleburst– Ericsson hitby3Glicensees– LeaveshandsetstoSonyEricsson– Morethan8,000consultantsarekickedoutin2001– SavedbynewissuedsharesinJuly2002– EmploymentinSwedenfrom43,000to21,000infouryears

• AdiversifiedICTSectorisborn

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TheICTsectorasapercentageofGDP

NMTCf.Ch 2

GSM1st disrupt

Inwirelessnetworkeq.:

1. Huawei2. Ericsson3. Nokia

(Siemens;Alcatel-Lucent)

Worldwide:Frommonopoliestocompetition

The2nd disruption

CloudcomputingMobileInternet

Bigdata,analyticsTechconvergence

Services,software,deeperdiffusionofICTinusingsectors

In2012Swedenhad 6times asmanyICT-companies but only twice the

number of employees

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Concentrationto Stockholmanduniversities

Internet-related businessmodels

Internet-relatedbusinessmodels

• ProofofConcepts• Industrialexits• LovedbyBusinessangels&VCs

• Employratherfewpeople• GreatimportancefortheuseofICTinothersectorsofindustry

• TechnologybasedB2B-companiesservemanycustomersinconsolidatedindustries

Finlandvs Sweden:PartII

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SuperCell

Rovio

Fingersoft

Other Companies

Finland SwedenMobilefocusvs Broadfootprint

Superconcentratedvs Concentrated

FinlandSweden

ICTpermeatesmanysectors

Threeaspectsinfocushere:

– ICTconsultantsasdriversofchange

– Embeddedsystemsinengineering

– Internetofthings- cloudcomputing

TheimportanceofR&D-relatedConsultancy

R&DrelatedICTConsultancyfirms

Typicalcustomers:EngineeringCorporationsmakingcomplex&assembledproducts

• Developingsoftwarecomponents(embeddedsystems)incostumerproducts&systems

• Developingsoftware&systemsforproductionprocesses

Ericsson

Firm XX

Atlas CopcoDeLaval

SaabFirm XX

Kockum

HusqvarnaViking

Saab Automobile

Ericsson

Ericsson

Saab

Saab

Hemocue

Autoliv

Ericsson Mobile

Firm XX

SaabVolvo

Atlas Copco

Volvo

Kapsch

Firm XX

Firm XX

Firm XX ABB

Is there a Swedish paradox?

• Sweden tops European Innovation Scoreboard 2016

• Stockholm top ranked among Europeanregions in the World Competitive Index of regions in 2014. (# 6 in the world)

• World Economic Forum ranks Sweden number 6 in Global Competitive Index 2016-2017 edition