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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


Thursday, Apr. 24

Learn more about Denmark during the Danish Business Delegations visit to SPIBA this evening starting at 5:30 p.m. at the Danish Culture Institute. Danish Consul general Klaus Sorensen will be in attendance and the buffet following a presentation on Danish companies in Russia will be the perfect opportunity to network with the assembled businessmen.

AmChams Human Resources Committee Meeting is scheduled for 9 a.m. this morning in their St. Petersburg office. Check their website for more details.

Friday, Apr. 25

Light Music presents the main events for their Cultural Kitchen project at Loft-Project Etagi today. A B2B event that focuses on Finnish food, arts, travel, music and design, the evening will conclude with a dinner by chef Jyrki Tsutsunen and dancing to music by Aino Venna. The event, which began yesterday with presentations by tourism and cultural institutions, concludes today with a preview of Finlands Flow festival and other musical events. Invitations are available from

Saturday, Apr. 26

At 6 p.m. this evening, stylist Liliana Modigliani offers 50 simple ways to up your style quotient with beauty tips at the Galeria shopping center on Ligovsky Prospekt. The event is part of the final day of the shopping malls Fashion Saturday sales event, this week focusing on top brands located on the ground floor as well as presentation from fashion experts on sprucing up your spring look.

Sunday, Apr. 27

Families shouldnt miss Childhood Planet 2014, the trade fair that started yesterday and concludes today at LenExpo. Not only will goods and services be provided for children and families but the event hopes to promote Russian brands and eco-friendly products using the latest technology available in the childcare industry.

Monday, Apr. 28

The Hotel Indigo will be the site of SPIBAs Acting Skills for HR and Other Managers master class this morning starting at 9 a.m. The event will begin with coffee before moving on to the class itself and conclude with a tour of the recently opened hotel. Confirm attendance by Apr. 24.

Tuesday, Apr. 29

Improve your English at the British Book Centers Interactive English Lesson tonight at 6 p.m. Students at pre-intermediate and intermediate levels are welcome discuss topics that are selected to help learners master the more difficult aspects of English grammar and vocabulary.