Lars Magnus Ericsson, his reputation in telephony manufacturing established, becomes a major supplier of telephone equipment to Scandinavia.

Because the Ericson factory cannot keep up with demand, work such as joinery and metal-plating is contracted out.

Much of its raw materials are imported, so in the following decades Ericsson will buy into a number of firms to ensure supplies of essentials like brass, wire, ebonite and magnet steel.

Much of the walnut used for cabinets is imported from the US.

As Stockholm's telephone network has expanded rapidly in 1879, the company had reformed into a telephone manufacturing company, but when Bell bought the biggest telephone network in Stockholm, it only allowed its own telephones to be used with it, so Ericsson's equipment sells mainly to free telephone associations in the Swedish countryside and in the other Nordic countries.

Ericsson was born in Värmskog, Värmland and had grown up in the small village of Vegerbol, between Karlstad and Arvika.

At the age of twelve his father had died, and he had had to start working as a miner, working until he had money enough to leave the village and move to Stockholm in 1867.

He had then worked for six years for an instrument maker, Öllers & Co., who mainly created telegraph equipment.

Because of his skills, he had been given two state scholarships to study instrument making abroad between 1872 and 1875.

One of the companies he worked at was Siemens & Halske.

Upon his return to Sweden in 1876, he had founded a small mechanical workshop together with his friend Carl Johan Andersson, who had also worked at Öllers & Co., and repaired foreign-made telephones.

This workshop was actually a former kitchen of some thirteen square meters situated at Drottninggatan 15 in the most central part of Stockholm.

In 1878, Ericsson had begun making and selling his own telephone equipment.

His phones were not technically innovative, as most of the inventions had already been made in the US.

In 1878, he had made an agreement to supply telephones and switchboards to Sweden's first telecom operating company, Stockholms Allmänna Telefonaktiebolag.

Also in 1878, local telephone importer Numa Peterson had hired Ericsson to adjust some telephones from the Bell Telephone Company, inspiring him to buy a number of Siemens telephones and analyze the technology further.

Through his firm's repair work for Telegrafverket and Swedish Railways, he was familiar with Bell and Siemens Halske telephones.

He has improved these designs to produce a higher quality instrument.

These are used by new telephone companies, such as Rikstelefon, to provide cheaper service than the Bell Group.

He has no patent or royalty problems, as Bell had not patented their inventions in Scandinavia.

His training as an instrument maker is reflected in the high standard of finish and the ornate design which makes Ericsson phones of this period so attractive to collectors.

At the end of the year he had started to manufacture telephones of his own, much in the image of the Siemens telephones, and the first product had been finished in 1879.