Russia:  IT Usage

Unfortunately for Russia today, like in other emerging markets, IT is a luxury.  The vast majority of the population has difficulty scraping together a living from day to day.  Home computers, cell phones and internet access are a distant dream for the majority of individuals and businesses in Russia.  Historically, the major consumers and producers of IT were the military and government.  IT was used to ensure parity in the arms race on all fronts with the West during the Cold War.  From the government/military sector, unlike in other countries, there was no trickle down of IT into the public market, adding to the obstacles faced in Russia today in diffusion of technology within the country.  Russia remains a very segregated society of the havs vs. the have-nots.  Many feel the lack of a middle class, for which economy and technology can proliferate, has remained a major hurtle in gaining wide-spread IT diffusion.

Russia has 6 million computers, one third of which have Internet access.  IBS, a major Russian computer and system integration company, estimated that during 2000 the number would grow by 20%.  In 1999, the Russian PC market grew 26% (in terms of units), reaching a penetration rate of 4%, but only 2% in monetary terms; the latter is attributed to considerable price reductions.  Portable PCs have a thin margin in Russia and constitute only about 10% of PC sales (Nazarova and Lakaeva, US Commercial Service, 2000).

There are two major groups of computer and office equipment end-users in Russia.  The first group of users includes small companies and individuals, which prefer less expensive computer and office equipment.  The second group includes large and medium government and private enterprises, banks and financial institutions.  The government market is mainly a replacement market with a large number of 486 models in use.  Banks, financial institutions and large oil and gas companies prefer high quality, sophisticated equipment.  This group will buy equipment as an integrated system and will require installation as well as future upgrade and after-sales service.  Public institutional customers such as universities, schools and government agencies, which depend heavily on government appropriations (and which eventually may become prime customers for large-scale deals), are presently operating under severe budget constraints (Chernobrovkina, US Commercial Service, 2000).
 

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