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. Last Updated: 07/27/2016

HP to Roll Out Moscow-Made PCs

California-based Hewlett-Packard, the world's third-largest PC maker, said this week that its first Russian-made computer would roll off a local assembly line in November, making it the only global PC major producing in the country.

HP stuck a deal with Russian PC maker Aquarius earlier this month to use two of its production facilities. These facilities are certified by the government, which means that any computer made there is a non-import, a distinction that opens up one of the most coveted sectors of the market -- government contracts.

A 1994 presidential decree bars federal agencies from purchasing imported computers when there is a analogous Russian alternative.

HP's entry has prodded other global majors, namely IBM and Compaq, to consider following with their own production.

HP, which had global sales of $48.8 billion last year, did not announce an investment figure and declined to comment. Industry players said HP was most likely not investing much: by production HP means assembly of ready-made imported parts.

An Aquarius spokeswoman said orders for HP units are already in, all from the government, but she would not elaborate. Neither firm gave production forecasts.

Aquarius, which will continue producing under its own trademark, says its two factories have a combined capacity of 156,000 computers a year. HP computers will at first be assembled at research institute Voskhod in Moscow and, depending on demand, will fill out the larger factory at Shuya in the Ivanov region.

With government orders in the tens of thousands this year, HP could profit from leaping the hurdle to sell to state agencies. The State Customs Committee, the Finance Ministry and the Railways Ministry are just three that have all put in orders for PCs and desktop servers in the last few months.

"HP is already a player -- and a strong player -- in the corporate computing market in Russia. This deal, however, is aimed at giving the vendor access to a part of this market from which it had been previously excluded," said Robert Farish, regional manager at IT research company IDC.

Farish said the decree hindering foreign computer sales was not taken seriously under the Yeltsin administration, recalling that soon after it was approved, the State Duma ordered itself Compaq computers.

HP currently has 3.8 percent of the overall market, putting it in fourth place following its new Russian partner, according to IDC 2000 statistics.

The company said in a statement that it didn't expect its Russian-made units to retail much cheaper than imported units, which are several price ranges above domestic brands. One area of concern is the level of quality, however. The company said quality won't suffer, but its competitors are dubious.

"Yes, clearly" there is a chance that HP's quality could be compromised, said Andrei Tikhonov, head of the personal computers section at IBM, which sells 20 percent of computers in Russia to state agencies. He said IBM would consider moving in if it could assure the quality matched to that of its imports.