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. Last Updated: 07/27/2016

High-Tech Booms as Buyers Look To Upgrade

MTA salesman at F-Center Computers showing a laptop to a prospective buyer.

Desktop PC3,007
Servers (x86)443
Plasma Panels673
Digital Photo978
Source: ITResearch

With her face pressed against the glass, Galina Aibusova, 62, stood admiring the new, sleek laptops at the Savyolovsky electronics market.

"I am looking for a system that can display graphics and graphs and do a little calculation," the stylishly clad, petite woman in gold-rimmed glasses told the vendor. "I want something compact enough to take back and forth to my dacha and do my research."

Aibusova, a senior researcher at Moscow's Microbiological Institute, is a symbol of a growing class of electronics consumers with a seemingly unquenchable appetite for high-tech gadgets. Chief among their interests are computers and flat-screen televisions.

Computer sales jumped 28 percent year on year to $5.3 billion in 2006, largely due to the increased popularity of hand-held computers, said ITResearch, a high-tech consultancy.

Sales of hand-held computers soared 69 percent. Overall, the information technology market grew a modest 1 percent to $13.5 billion, ITResearch said.

"There's a paradigm shift in taste for PCs and electronics," ITResearch director Yury Bonkarev said.

"Luxury goods once considered elitist such as 42-inch flat-panel screens are now selling like hot cakes across the country."

Consumers bought 7.2 million computer monitors for $1.96 billion last year. While this represents just 6 percent growth over the previous year, suggesting market saturation for the product, industry players say the sales will increase.

"The sale of LCD monitors exceeded our most optimistic expectations," Bonkarev said, adding that the flat screens have completely squeezed out the traditional, boxy monitors. The 17-inch LCD monitor accounted for 60 percent of all monitors sold. Prices for the monitors have been sliding, spurring sales.

An influx of petrodollars and soaring personal incomes are fueling the boom in sales. Consumers are also beset on all sides by offers of easy-to-get, no-collateral-down loans.

Computer sales figures are a bit challenging to track because one in every five PCs sold in this country is self-assembled.

"Self-assembledPC models dominate the market in Russia, unlike in developed economies, sometimes constraining researchers efforts to assess trade volume," said Yury Bonkarev, director of ITResearch, a high-tech consultancy.

But keeping abreast of the sales of self-assembled units is of the utmost importance to major computer producers, which closely monitor the expansion of their market share.

Assembling computers at home shaves as much as 50 percent off the price -- and is a reason why pre-built Macintosh computers are less popular here.

"Self-assembling PCs is like making moonshine," said Pyotr Belayev, a student at the Moscow Institute of Electronic Technology who built his own computer. "The PC market cannot get by without it."

Belayev said many students at his institute earn a living by assembling computers.

"One in every three gadgets is purchased on credit here," said Olga Litovskaya, sales manager at F-Center Computers, one of Moscow's largest computer retailers, with stores across the city. "People sometimes line up to apply for credit."

Consumer credit, now a $78 billion business with 91 percent year-on-year increase in 2006, has expanded the electronic consumption horizon drastically.

About 35 percent of consumers have taken out loans or purchased goods on credit over the past two to three years, according to a nationwide poll conducted in May by the Public Opinion Foundation.

"Apart from easy access to credit, low levels of savings and low taxation give Russians a lot of room to spend," said Brady Martin, a consumer analyst at Alfa Bank.

Bonkarev said electronics giants such as Sony, Samsung, Panasonic and LG Electronics had scheduled the opening of assembly plants in the Kaliningrad region to tap into growing sales.

"This will further bring down prices, bringing electronic gadgets even more within the reach of Russian consumers," he said.

Bonkarev insisted, however, that the surge in consumer spending was nothing to get excited about yet.

"Last year's numbers are well in line with what you would expect in an economy where personal incomes are rising and the middle class is basking in an endless inflow of high-tech gadgets," he said.