Sweden is known for many things -- functional furniture design, vigorous massage techniques, pickled herring, long winters, and blondes. But here's something you may not know about Sweden: Stockholm is emerging as the world's wireless technology hot-spot.
Stockholm has been a major European center for both Internet and telecommunications companies. Now this clean, Scandinavian city, closer to Moscow than to London, boasts the world's highest concentration of wireless Internet companies. Every major IT company is here trying to capitalize on the potential of the nascent wireless Internet. Intel recently set up an office in Kista, outside Stockholm, to cash in on the promise of the wireless Internet. "It's the same feeling as in Silicon Valley -- every week there is a new company here," says Tuivo Rцjder, business development manager at Intel's wireless competence center.
The number of new IT companies setting up shop in Stockholm has increased by 100 percent -- to more than 1,000 during the first half of 2000 -- compared to last year, according to the Swedish government. Meanwhile, the number of foreign investments and acquisitions also has doubled through June, equaling the amount during the whole of 1999, reports Swedish business magazine, Veckans Affдrer.
A major reason for this concentration is the presence of Ericsson, one of the big three mobile communications companies -- along with Nokia and Motorola -- and arguably the world leader in building wireless infrastructure. Ericsson is based a few miles outside Stockholm in Kista. When Microsoft opened its wireless facility in Kista last year, CEO Steve Ballmer referred to Stockholm as the mecca of mobile communications.
A host of U.S. technology companies have set up operations in Stockholm or in Kista to be near the center of the wireless industry. Motorola, the U.S. mobile communications giant, has set up its wireless Internet applications center in a 16th-century townhouse in Stockholm's Old Town. In addition to Intel and Microsoft, Apple Computer and Oracle also have decided to locate in Kista, which has been given the moniker "Wireless Valley," despite the very gentle roll of the former farmland. "To have a valley, you need a mountain," says one local with a wry smile.
SWEDISH MESSAGING
The Swedes themselves contribute to this wireless phenomenon. Mobile phone penetration in Sweden is nearly 70 percent and, with the exception of Finland and perhaps Norway, represents one of the highest rates in the world. "If you eliminate the very old and very young, mobile-phone ownership rises to about 100 percent," says Eric Paulak, a wireless industry analyst at the Gartner Group in Stockholm. In Sweden, mobile-phone usage is so widespread that someone without one risks being considered a "weirdo." Mobile-phone penetration is about 25 percent in the U.S.
What separates Sweden from other European countries that also boast high mobile usage is that PC and Internet usage here is also above 60 percent, making the country an ideal test market for the wireless Web. Mobile-phone usage in Italy is quite high, but Internet usage is low, for example. The same goes for Japan, where Japanese teens routinely use phones equipped with the I-mode packet-based service to send pictures and messages, but where few access the Web directly, partly because I-phones offer slow data transfers. However, the technology used by most European firms offering wireless services -- Wireless Application Protocol (WAP), as opposed to I-mode's Compact Wireless Markup Language -- also has serious limitations.
Stockholm's closest competitor in the wireless realm is actually only 500 miles across the Baltic Sea: Helsinki, home to mobile phone giant Nokia. A higher percentage of Finns have mobile phones than do Swedes, and Finns also are early adapters of new technology. Some analysts say that Nokia has a slight advantage over Ericsson in the mobile phone market, but that Ericsson is better at wireless infrastructure.
Most foreign firms have chosen to locate in Stockholm rather than Helsinki, however, for the city's emerging wireless technology environment. About 200 wireless Web startups have sprung up around Stockholm over the past year. Less than half that number chose Helsinki. Another reason is that offering stock options to startup employees in Finland is more difficult than in Sweden, due to the way options are taxed in the two countries. "In Sweden it's difficult, but in Finland it's impossible," says Anders Larsson, CEO of Stockholm-based NetLight Consulting, which counsels startups in the emerging wireless Internet sector.
One tangible indicator of the wireless startup buzz in Stockholm is the growing accessibility of venture capital. In the early 1990s, only six private VC firms operated in Stockholm. Now 130 do. During the past 12 months, the number of new VC firms has been growing at one per week, according to the Swedish government. Last week, Startupfactory, a VC company specifically targeting wireless startups, announced it would receive 500 million krona ($56 million) from a group of investors, led by Softbank of Japan. Startupfactory is backing several wireless Internet companies in Stockholm, including Picofun, which develops WAP-based games for mobile phones.
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