Mika Pajarinen, Petri Rouvinen & Pekka Ylä-AnttilaETLA, The Research Institute of the Finnish Economy (Etlatieto Oy)

Eric Giertz & Annika RickneKTH, Royal Institute of Technology (INDEK)

Finland & Sweden – Incredible Success in ICT*

Assessing past achievements and future potential in ICT: A joint future for Finland and Sweden?Finland’s Embassy in Stockholm, 19 March 2015.

* Kindly supported by VINNOVA & Tekes.

The Nordic ICT Saga – Some Historical Highlights

“Wherever two or three Swedes... or Finns... are gathered together…

immediately establish … a telephone exchange.”

Alfred R. Bennett in 1895.The Telephone Systems of the Continent of Europe.

Proposed by Carl-Gösta Åsdal, Televerket, 1969.

NMT, Nordisk Mobil Telefon, opens in 1981.

The largest mobile market worldwide.

Open & competitive (equipment).

Handset mkt shares, ‘85

Mobira(Nokia)25.7%

Ericsson16.9%

Mitsubishi

1982, GSM, Groupe Spécial Mobile

1987,the 1st tech spec

1991, Roll out

Tech: From analog to digital

New tier of communication

More intense competition

Higher industry speed

GSM

0

2

4

6

8

10

12

1980 1985 1990 1995 2000 2005 2010 2015

ICT Sector% of value added

Sources: OECD (incl. def’n), ETLA, KTH.Note: the denominator is the total value added as defined in the OECD/STAN database, whichis somewhat less than GDP.Ericsson 2000: Nordea.

Finland

FinlandwithoutNokia

Sweden

SwedenwithoutEricsson

NOW: Fin & Swe ICT sectors are similar ...

5–6% of GDP, 3–4% of work hours

... and different:

Fin ICT still +40% of business R&D, Swe 15%

Swe 2× Fin persons employedSwe 6× Fin companies (e.g., +11,000 ICT consultancies)

Swe has been growing & Fin shrinking since 2008 Fin employment decreased by 10,000Swe employment increased by 4,000

2nd disruption!?

1011

0101

1100

0010

3D

IoT

Digital Convergence+

Corporations

Systems/Hardware

Specific Solutions

Tech hegemony

Consumers

Content/Services

Platforms/Ecosystems

Concepts & Customers

0

2

4

6

8

10

1980 1985 1990 1995 2000 2005 2010 2015

ICT Sector% of value added

Finland

Finland– Nokia

Sweden

Sweden– Ericsson

Sweden was forced into the 2nd distruptionseveral years before Finland.

Ericsson & related business decline made a dent – but not a long term negative impact.

Explanatory factors and potential future success stories

From a corporate society to a time of turbulence

• Developing pairs: Ericsson/Televerket, Saab makes computers for public serv.

• Centrally planned infrastructure dev’t

• Competition in mobile communication: Comviq–Televerket

• Fast penetration of PC:s & phones

• Early applications in society (authorities, banking, e-commerce)

Change from a corporate society

• End of telecom operators monopolies

– Telia: IPO, no 3G license, merges with Sonera

• The IT-bubble bursts 2000

– Ericsson almost into bankruptcy

– Young ventures decline (Framfab, Icon Medialab, Spray)

– IT Consultants out of work

A time of turbulence

New specialized venturesICT-related business models

More time to adapt

Resources & competences remain• Fast penetration of 3G

• Ericsson survives with new business concept

New applications and ventures are born

Time & adaption

The importance of R&D-related IT consultancy firms

ICT applications move outside core sector

Growth of ICT consultancy sector

Early adoption of ICT in many different industries

ICT consultants play crucial part

Sweden has so far adapted wellOpportunities in subsectors(employment by subsector)

A good position globally

• IDC Information Society Index, WEF Network Readiness Index

• Early business interest: Cloud, Internet of things, Social media

• Growing subsectors, e.g.

– Netservices – a decade old subsector & quite large

– Gaming, 200+ firms, 50% established after 2010, most profitable, high growth of revenues, successful games, No 1 globally?

– E-health

Software16%

Net services12%

Repair, maint.

9%

IT operations

10%

Hardware, comp. 6%

IT consultants, commercial

systems9%

IT consultants, R&D

9%

Hardware, products &

systems19%

Up until the early 2000s, Nordic cooperation greatly contributed to Fin & Swe ICT success

Since then, trajectories & interests departed but, with the 2nd disruption, are again aligned

NMT/GSM per se cannot be replicated, surely there is scope for Nordic cooperation!?

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