The Rapid Collapse of the Swedish Mechanical Calculator Industry
beautifully made with 2 300 crafted parts the facet mechanical calculator first entered the market in 1932 and for the next 40 years it basically stayed the same the swedish company that made it faster employed thousands of people around the world to build and sell them then over the span of just two years they went from millions of dollars in profit to annihilation in this video we're going to talk about a faded swedish icon our story begins with a failure in 1922 a conglomerate located in the city of atverburg sweden went bankrupt a bank took over the assets and restarted the company they gave it the creative name at vidberg's industrial please forgive me for my poor swedish 35 year old elf ericsson was appointed to be ceo of the 200 person company he had previously worked as deputy ceo of another furniture company gathering over a dozen small manufacturers under one corporate entity his new job was to run this random conglomeration of companies including an office furniture maker sawmill brewery slaughterhouse and several dairies the business had to get back on its feet ericsson sold off some of these businesses and tried to return to the core wood processing business he struck a deal with the swedish home appliance maker electrolux to produce wooden parts for electrolux furnitures and in 1925 he struck a deal to produce wooden bodies for volvo which didn't last as the company moved to metal admirable efforts but the wood processing market in sweden and abroad was continuing to struggle and ericsson and adverbergs soon began redirecting the company towards selling office machines namely typewriters adding machines and mechanical calculators in 1924 early on in the company's history advertibergs began selling typewriters from the royal typewriter company in the united states alongside this business the company leveraged a small mechanical calculator subsidiary of theirs facet in the late 1910s a sales agency company called axel wibble employed an office manager named carl rudin born and educated in uppsala rudin became fascinated with the mechanical calculators being repaired at axel's repair shop and taught himself how to make them rudin soon built his first calculator an odner type decimal machine it uses a pinwheel rotor and levers to perform calculations turn the wheel one way to add numbers turn them the other way to subtract but rudin made a few improvements which made it more user-friendly for instance a reverse lock that prevents accidental turns impressed axel started facet which is swedish for answer in 1918 and funded a factory to produce the machine this first lever calculator was called the facet original but a few years later axel fell victim to financial difficulties during the economic turbulence of the 1920s they went bankrupt and its assets were taken over by its bank the same bank as advedteberg's industrial the bank offered facet to add vitiburg's and ericsson agreed to take it on so long has calculator production was moved to the city facet and rudin moved over to their new city and continued making mechanical calculators most of these pinwheel machines used small levers to set the calculator's pins so to input their numbers for calculations this lever based number input method was cumbersome the industry's holy grail was to replace it with one reliant on a 10 key number keyboard kind of like the dalton adding machine which was first invented all the way back in 1902 and became a massive hit in 1929 rudin came up with an idea for such a machine an inverted pinwheel mechanism which turns the pinwheels on their side he experimented with this for the next few years culminating in the company's 1932 breakthrough hit the facet model t i recommend watching a youtube video about how the model t worked you can input a number using the keypad but then you perform calculations by turning the crank or pulling some other lever for someone used to digital calculators mechanical calculators are really a different experience the company paid rudin a very handsome sum for his work in a time when most people earned about 500 kroner each month rudin earned 3200 kroner each month after the model t was released rudin left facet to open a design office of his own but this business failed he died in 1939 but his estate continued to receive royalties more than six hundred thousand kroner in total the model t's massive success convinced ericsson to continue investing in office equipment the company acquired the typewriter business halda replacing the royal typewriters they had sold for a decade costing over six thousand dollars a facet calculator was a heavy purchase so a heavy-duty sales force was essential ericsson placed over a hundred well-trained agents all over the world from the very start the company focused on the export markets sixty percent of production was sold overseas to west germany italy france and the united states germany was so important that facet had a factory in dusseldorf product wise facet introduced an electrically cranked model with a motor two years later in 1934 but the machine itself would not significantly change for the next 40 years and why did it have to the product sold extremely well in the 1930s through world war ii and into the 1950s driving half of facets total profit after leading the company for over three decades elf erickson resigned as ceo in march 1953 clearing the way for his son gunner to take over at this time the company and its subsidiaries had met all of their growth marks they employed 10 000 employees in sweden and another 800 abroad their stock was publicly traded but the ericsson family controlled the majority through their foundation facet had risen to be the world's 11th largest producer of mechanical and electromechanical office machines in 1955 sales reached 40 million dollars with total annual profits of 2 million dollars gunner ericsson graduated from the stockholm school of economics in 1946 and worked his way up within the fasted subsidiary he first became deputy ceo of the advente berg's holding company and later took over the top job in 1956 to 1957 as his father's health declined gunner considered himself a sales and marketing man and he sought to put his stamp on the company reorganizing it around the core mechanical calculator product advedburg took on facet's name for itself and had all of its other products including a new electric typewriter renamed as such too facet enjoyed great financial success but the market was starting to heat up ibm was especially worrisome in the mid-1950s ibm was starting to roll out their early electronic computing systems namely the ibm 650 but back then electronic computers were large and cumbersome mainly for special scientific and government users facet believed them to be unsuitable for their core office user market furthermore in 1957 facet management had visited the united states tech giants at their campuses in new york what they saw was a horrendous manufacturing dumpster fire with serious problems and long delays they concluded that the us giants would focus on the u.s first and that facet had some time regardless the company knew that it needed to explore electronics and establish a subsidiary to pursue it facet approach to gaining knowledge in this particular field depended on talents talents with knowledge and qualification in electronic technologies luckily those were available in the 1950s the swedish government set up the swedish board for computing machinery its purpose was to work with advanced u.s research institutions to create a computer it resulted in the besk binary electronical sequential calculator built with 2400 vacuum tubes and based on an american computer design designed by von neumann himself besc was for a brief time the world's fastest computer the swedish government however decided not to continue investing in computer technologies and the board dissolve facets swooped in ahead of its local rival saab and hired 19 of the board's most prominent engineers they were called the best boys by october 1957 the best boys had successfully built another basque for facet along with a number of unique peripherals like a paper tape reader they intended to resell computing time to swedish companies but quickly found that this business could not pay for the incredibly high r d expenses the project incurred this was a time before the computer became a powerful tool in both the commercial and industrial markets and a time before the transistor would revolutionize the cost of making one 10 times over looking back copying the best was a terrible idea just rebuilding the last best computer prevented the team from learning and using the technology to make the next best computer transistors facet tried to strike cooperation agreements to share these growing costs at first ibm was a little interested but that quickly faded when american trade restrictions loosened up and ibm entered the west european market as a direct competitor fasted reached out to saab the country's other major industrial company basab already had their own computer development program and the company was busy trying to launch a new car factory finally the company struck a deal with autonetics whose parent company supplied electronics to nasa the company was looking to build electronics for non-military purposes basa thought it could leverage its global sales force to sell those products and along with whatever the two developed together but again bad luck the deal stopped and started over the years wasting precious time finally in 1966 autonetics ended up pulling out completely to refocus on the military market it ended the whole self-developed computer project the best boys eventually produced 11 facet edb computers but top management started winding it down in 1961. ending research on electronic computers was a sensible short-term decision the electro-mechanical calculator market was hotter than ever and the best boys were young independent-minded and frequently clashed with top management their division was losing money and nobody knew how to sell these high-tech hard to use computer things in total facet invested about eight to nine million dollars into the project making less than half that back in revenue so it was a sensible short-term decision one that many other european computer companies would also make but left facet dangerously vulnerable on a single product what would happen if someone made a better calculator than facet can 1961 a uk-based ticket punch machine maker called bell punch produced the first desktop all electronic calculator they named it a new inspiration to arithmetic or anita anita retained the same keyboard that contemporary mechanical calculators had with 10 number keys for each digit of input this was done to make users more familiar with the device but inside anita used vacuum tubes to produce its results it produced its multiplication and division results far more simply than any mechanical machine the anita sold at a competitive price and within three years bellpunch was selling 10 000 machines a year anita success spurred other companies to try making electronic desktop calculators too in 1964 three all transistor calculators appeared on the market the american freedom ec130 the italian ime84 and most famous of all the japanese sharp cs10a these transistorized electronic calculators were revolutionary but at the same time they were still big bulky and cost a pretty penny about two thousand to almost six thousand dollars so early on they sold at relatively low volumes facets revenues did not immediately vanish when the digital calculators arrived in fact they kept growing revenues had grown from 299 million krona in 1960 to 519 million in 1965 corresponding to roughly 100 million usd that year profits hit 58 million krona or roughly 12 million usd a new high riding high and well aware of the progress digital calculator companies had been making that year gunner ericsson decided to visit japan he wanted to strike an agreement with the maker of that sharp cs10a digital calculator then named hayakawa electronics but later changing their name to sharp corporation there he pitched to them the value of the facet sales organization and its global reach the japanese agreed and they struck a resale deal in december 1965. a month later facet ordered 1 400 cs10a calculators from sharp at about 530 each rebranded them and then started selling them to customers that year in 1966 facet was only able to sell about half of the 1400 calculators they purchased from sharp was there something wrong with the product or did they sell it wrong relations eventually soured has sharp move to selling calculators directly to customers under their own brand ericsson had thought that they were exclusive guess there were not in july 1966 facet acquired one of its competitors atto for cash and stock addo made office equipment some data processing equipment and bookkeeping machines but their best-selling product was a mechanical adding machine the ado x first released in 1932.
the company's controlling family the agrels had spoken to facets several times over the years about an acquisition gunner later said that he wanted to acquire addo because he had been worried that a competitor might get them acquiring addo added 2 000 employees and 200 million krona in annual revenue to facet but the acquisition went terribly wrong addo was losing money and had little to bring to the combined corporation and the agrel family now with a significant stake interfered with plans to consolidate the two organizations 1966 began the company's gradual profit decline in 1967 mechanical calculators still contributed 52 percent of the company's profit as late as 1968 the majority of the 2.8 million calculators sold in the market were still mechanical also in 1967 the integrated circuit was invented in 1966 an electronic calculator without a printer cost about one thousand three hundred dollars four years later in 1970 an electronic calculator like the sharp qt8 costs an average of just 520 as transistors gave way to integrated circuits people realize that you can put the entire calculator onto a single chip and then make that chip at scale cheap electronic calculator chips combined with modern digital screens and battery power enabled a wave of cheap digital calculators released in 1972 the japanese casio mini broke open the small calculator market selling a million units at just 59 the american hewlett packard 35 scientific calculator had trigonometric and exponential functions and sold 200 000 units in western europe over in the uk the british sinclair cambridge calculator cost just 45 dollars at the time and sold millions the intense competition across europe america and japan annihilated the calculator market facet and the rest of the mechanical calculator industry found themselves caught in a hurricane how can a company that has sold the same product the same way for 30 plus years change in just a few years a mechanical calculator was a high margin product 60 or higher a heavy duty machine that needed a big expensive global sales force to sell install and service it but now suddenly here comes a piece of sand that does all the same things and more but at a fraction of the cost you can sell it in drugstores bookstores anywhere and it kept getting cheaper facet only offered six digital calculators all of which came from sharp far too few they had no idea how to make their own though they would eventually try and there was no money or time to do it anyway the speed with which the market changed caught everyone off guard cassio literally threw out every transistorized calculator as soon as they realized the power of the integrated circuit facet on the other hand in july 1970 facet planned to build 16 000 mechanical calculators but sold only 1051 that year but they held on to the rest ending up selling just 6 000 total of that year's production inventories surged throughout 1971. in 1971 fastened went from 25 million krona of profit to a stunning 54 million krona loss they laid off 1 500 people that year a year later in 1972 another 2 400 people were dismissed various ceos came and went the stock crashed from a high of 390 kroner in 1966 to just 60. there were calls for the swedish government to nationalize facet but in the end electrolux acquired the company for adcroner a share mostly for its real estate throughout the 1970s and 80s fasted tried to make office computers but continued to lose money and was finally fully liquidated in 1998. gunner ericsson later lamented
facet's lack of experience with electronics the company tried producing digital calculators in sweden but high labor costs a lack of talent and general incompetence made it hard near the end in 1971 fasted made just 100 digital calculators a week a year later cassio would sell a million casio minis in the first 10 months after launch the company and its ceo considered their organization specialty to be marketing sales and most importantly brand didn't matter what was actually being sold the brand would convey a certain cachet and guarantee a number of sales at least until it didn't facet mechanical calculators are still hanging around they're beautiful but are now little more than relics of a bygone era and a reminder of the power of silicon scaling alright everyone that's it for tonight thanks for watching subscribe to the channel sign up for the newsletter and i'll see you guys next time
2022-10-05 21:19
