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Medvedevs Dumb Phone

Published: December 18, 2013 (Issue # 1791)

Russian Technologies head Sergei Chemezov presented Prime Minister Dmitry Medvedev with what he called the first Russian smartphone.

Towhich Medvedev responded, Apple is worried.

Apparently, Medvedev follows internal developments atApple personally.

Akey characteristic ofevery so-called Russian gadget, designed anddeveloped with taxpayer money, is that it is always presented first tothe countrys leaders. We would never hear that Apple had just presented its latest iPhone toU.S. President Barack Obama. Instead, we hear that it presented its phone tothe public, that so many units were sold andthat Apple shares rose or fell byso much as aresult. If Apple offered Obama its first phone off theassembly line, two things would happen: One, Obama would ask if Apples management was crazy; andtwo, consumers would feel offended bythe gesture.

But I am getting astrong sense ofdeja vu fromthis latest smartphone presentation. Three years ago, Vladimir Yevtushenko, chairman ofthe board ofSistema, presented then-Prime Minister Vladimir Putin with the first domestically produced smartphone, saying, It matches theiPhone 4.

But as Eldar Murtazin, antechnology analyst with Mobile Research Group, quickly noted, themodel inquestion did not match theiPhone 4. It was produced byZTE, aChinese manufacturer ofinexpensive phones whose technology lags behind even Huawei. That phone was uncompetitive inboth Russia andthe world, andanyone who wanted one could buy it directly fromChina ata fraction ofits sale price inRussia.

Sitronics, Yevtushenkos subsidiary company responsible forall such creative electronics projects, held aninitial public offering in2007. Atthe IPO, its market capitalization amounted to$2.3 billion, with one global depository receipt, or GDR, priced at$12. But that price obviously reflected investors overly optimistic hopes forthe Russian electronics wonders presented toPutin andMedvedev.

But whenSitronicsunderwent delisting inAugust 2012, theshare value had dropped to92 cents per GDR. Insome countries, any company with close ties togovernment leaders andthat sold shares toinvestors atone price andthen bought back those shares ashort time later ata price that was more than 12 times lower might very well prompt aserious investigation byregulatory bodies.

Theres more. InAugust 2011, Anatoly Chubais, head ofRusnano, showed Putin abreakthrough andunique Russian tablet designed toreplace Russian schoolchildrens many textbooks. But there was ahitch: Thetablet, ofcourse, was not made inRussia. It had been developed byPlastic Logic, aBritish company, andturned out tobe too expensive tocompete onthe Western market.

Rusnano signed a$700 million contract with Plastic Logic tobuild aproduction facility inZelenograd andapparently planned torecoup expenses bypushing thetablet onRussias 14 million school children. But even Chubais failed. Rusnano acknowledged inAugust 2013 that it had lost 3 billion rubles ($92 million) andabandoned theproject.

Officials use avery simple scheme toobtain government funds fornew Russian gadgets. First, they acquire second-hand technologies fromthe West atoutrageous prices. Second, they present aproduct mock-up toPutin andMedvedev as the latest breakthrough. Third, themoney spent toacquire thetechnology stays inthe West, andthe remaining sum spent onimplementing theproject is written off thebooks andpocketed.

Sounds pretty high-tech tome.

Yulia Latynina hosts apolitical talk show onEkho Moskvy radio.


Times Talk


Sunday, Apr. 20

Celebrate Easter at Pavlovsk during the Easter Fair that begins today and continues through next Sunday. Visitors will have the chance to paint Easter eggs and children can take part in games as well as help decorate a tree in honor of Christianitys holiest day.

Today is one of the final days to see the exhibit Cacti Children of the Sun at the Peter the Great Botanical Garden. Starting Apr. 17, budding botanists will marvel at the variety and beauty of the deserts most iconic plant.

Monday, Apr. 21

Improve your grasp of Neruda, Bolano and Marquez at TrueDAs Beginners Spanish Lesson this evening at their location on the Petrograd Side. An experienced teacher will be on hand to help all attendees better understand the intricacies of the language and improve their accent.

Tuesday, Apr. 22

SPIBAs Breakfast with the Director event series continues as the association welcomes Andrei Barannikov, general director of SPN Communications, to the Anna Pavlova Hall of the Angleterre Hotel this morning at 9 a.m. Attendees must confirm their participation by Apr. 21.

The AmCham Environment, Health and Safety Committee Meeting is scheduled to begin at 9 a.m. this morning in the their St. Petersburg office.