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. Last Updated: 07/27/2016

Kvant Plant Blossoms As PC Market Revives

On one of my earlier visits to Russia in 1992, I spoke to a representative of Intel Corp. about how ready Russian electronics factories were to turn out world-level products. Literally exploding with enthusiasm, he told me that Intel could make world-level products in Russia tomorrow. Though some months later that same Intel representative told me that any kind of production in Russia was only for the foolhardy, his initial enthusiasm had a very concrete cause. He had just returned from a visit to the Kvant plant in Zelenograd.

Until recently it was difficult to talk about Russian personal computer "manufacturers," since making a PC here was basically a process of slotting together components on a tabletop. Today, however, a considerable number of Russian-made PCs are assembled using technology as advanced and automated as that used by many of the world's largest computer companies.

Approximately 20 percent of all the PCs assembled in Russia last year were assembled at AO Kvant, a factory based in Zelenograd, a town in the Moscow region. Kvant has modern, highly automated production lines with the capability of turning out up to 1,600 PCs per day. The factory also assembles television sets from imported components; the combined daily volumes of PCs and TV sets currently averages around 1,600 units. At least two famous-name Asian television manufacturers are currently using Kvant to assemble many of the sets they sell in Russia.

Kvant was built in the early 1990s and its production lines, imported from Diafuku of Japan, were at the time among the most advanced in the world. The plan was to use the Zelenograd plant as the center of state-controlled PC production in the Soviet Union.

But when the Soviet Union collapsed and state budgets disappeared, the plant was left high and dry. At that time Kvant could find few customers because the country was in economic chaos and the computer market was in the doldrums. Its production capacity was far beyond anything required by private assembly companies at that time. Also the cost of production at a high-class facility like this was more than local companies were prepared to pay.

There were two attempts to make use of Kvant in 1993, but both proved to be before their time. In 1993 the Russian company IVK planned to leverage the factory to win large Russian state contracts. Yet despite much fanfare and government lobbying, the company is still waiting for its first really big contract. At around the same time, IBM began to use Kvant to manufacture many of the desktop PCs it supplied to Russia. But though the company was assembling quite a large number of computers, it could never make the operation profitable enough under the prevailing tax and duty regime in this country. What has changed today is that there are now Russian PC makers with sales large enough to make it sensible and profitable for them to use Kvant. The plant's two largest customers, VIST and R&K, can alone guarantee production volumes of several hundred PCs per day.

Also different in 1997 is that Russian consumers are now willing to pay the extra 1 percent needed to buy a brand that was assembled professionally. An extra $10 for a computer may not seem much today, but it shows how far the market has come: Just three years ago there were plenty of buyers willing to travel from one corner of Moscow to another just to save that much on the price of a PC.

Robert Farish is the editor of Computer Business Russia; e-mail: