Computerlink: Slow road to revolution: Producing Windows in Russian was a headache for Microsoft. Making it in Russia was a nightmare. Robert Farish reports

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The Independent Online
The enormous impact Microsoft Windows has had on users and suppliers of personal computers the world over has at last come to Russia. Last autumn saw the long-promised, long-overdue public launch of Windows 3.1 in Russian. The product had been finished for months, but, for classically Russian reasons, it had not been available in large enough volumes for Microsoft to risk advertising the fact.

It had been the age-old Russian problem of organising reliable, sustainable production and distribution that held up the general release of Russian Windows for the best part of six months. The delays are not the fault of Microsoft Russia but reflect a problem facing all software vendors in the country: software publishing. The problem is proving toughest for Microsoft, which is likely to need to shift the greatest number of products.

In the past few years, Windows has been one of the world's best- selling software products. Windows is a graphical environment, showing programs as icons, or pictures, making an IBM-compatible PC much easier to use. More than 16 million people now use Windows worldwide.

In Russia, Windows is poised to have a similar impact. A Russian- language interface will make computer technology accessible to thousands of people previously put off by strange commands in English. In time, Russian Windows should help the automation of Russian business, and allow workers to be trained more easily.

Printing in Russian will become enormously simplified. (Those who have wrestled with getting software applications to print in Cyrillic will appreciate this advance.) Windows contains a large catalogue of printer drivers, which means it will be possible to print in Russian from all of the world's popular printers. It also allows an enormous improvement in document presentation. At present, the majority of printers in Russia are simply being used to print plain text.

Long-term demand for Windows in Russia will be massive. Until the Russian-language release, the company sold English Windows 3.1 with English-language documentation. Since July 1992, it has sold close to 10,000 copies and Robert Clough, general director of Microsoft Russia, says the company even had problems in delivering the required volumes of English-language versions to his distributors.

The Russian version of Windows appeared at a time of healthy expansion in the Russian package-software business. Although circulation of illegally copied software is probably more widespread here than elsewhere in the world, companies say a greater proportion of users are slowly seeing the benefit of access to the help-lines, full documentation and cheap upgrades that come with copies bought legally.

Last year was a successful one for most of the major players. Borland International claims that up to half of its business in the former Soviet Union (30,000 packages in three years) was generated in the middle six months of the year. The company says in the two months following the product's launch it was selling 2,000 copies of the spreadsheet Quattro Pro every month. Lotus Development reports similar levels of success with the Russian version of the spreadsheet 1-2-3 and the electronic mail application CC: Mail.

But there is a cloud on the horizon for all of these companies. In trying to organise local publishing, they have come up against the same problem that manufacturers have faced in Russia for almost 60 years - they are having to do business with a state monopoly. While there are plants that can make manuals, cardboard cartons, organise shrink wrapping and disk copying, there is only one capable of manufacturing a quality software product from start to finish in the Russian Federation - Kazanski NP Program i Produkti in Tatarstan.

Kazanski was established in the late Eighties, when modern German-, US- and British-made equipment was installed in the plant. It remains state owned and there is little prospect of its employees finding the capital to buy its costly equipment from the state. What sets the plant apart from so many Russian factories is that it is relatively well managed, professional and can, when pushed, exercise Western standards of quality control.

No one who deals with the plant will speak to the press since to damage your relationship with Kazanski is to put at risk your whole Russian operation. So the precise arrangements firms make are shrouded in mystery. Yet the plant's monopoly is inhibiting the growth of the Russian package-software market. It restricts supply and influences pricing.

Within reason, the Kazanski plant can set its own prices by looking at what a product costs to make in the West. Importers to Russia have to pay absurdly high import tariffs on package software, so Kazanski is in a position to pitch its prices just low enough for Western companies not to want to import their products. The second problem is delivery times. Limits on capacity at the plant and the lack of competition mean orders can take a very long time to fill.

The head of marketing at Kazanski, Albert Galyaoutdinov, says the cost and time an order takes depends on its complexity, but that a new product of more than 10,000 units will take about six months. He denied that prices at the plant were close to world levels.

But customers speak of impending price rises and increasing delays. As pressure on the plant grows, delivery times slip. In one case a product had still not been delivered after eight months. Others speak of a constant, fruitless search for alternative suppliers.

Alternatives have been tried. One large local software company tried to do the job using a collection of contractors. The strain almost brought the company to a standstill. The task of delivering all the materials to printers, transporting semi-finished products around the country, monitoring quality and then bringing all the elements together into one box proved Herculean.

A compromise adopted by some Western companies is to manufacture Russian versions of products abroad and then import them. This is quicker, simpler to manage and far easier to organise in terms of quality control. After many months of negotiations, Microsoft Russia decided to organise all software production outside Russia. But this is not a long-term answer. To remain competitive, vendors already sell Russian versions 50 to 60 per cent cheaper than US versions. The profit margin on Russian versions imported from abroad is very small, or non-existent. Microsoft Eastern Europe's general manager, Jurgen Stranghoner, says Microsoft Russia is, in effect, selling at cost.

The problem is typically Russian, so the solution should follow the usual Russian maxim in these situations: 'If you cannot find someone able to do an acceptable job for you, do it yourself.' One large customer of the Kazanski plant said, rather enigmatically, that he 'would not rule out the possibility that an alternative facility may be established in Moscow'. This has to be the long- term answer. Without competition, the Windows revolution could be postponed indefinitely.

The author is editor of 'Computer Business Russia'.

(Photograph omitted)

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