IRU team: "Support from the state, understanding from the customer, product and responsibility from us"

According to Sergey Kochepasov, General Manager of the iRU project, and Denis Antsiferov, Technical Director of iRU, Covid-19 is not the most significant factor that will affect the Russian IT market in 2020. They told us in an interview with our readers why this is so...

CRN/RE: The most widely discussed topic now is life during the pandemic and after it. How has the crisis affected the Russian IT industry and how will it come out of it?

Sergey Kochepasov: Indeed, there is a lot of talk about the problems that Covid-19 brought us. But the results with which the Russian IT market ends in 2020 will also depend on other factors: fluctuations in the dollar exchange rate, the general economic situation in the country, technological wars between the United States and China, etc.

Nevertheless, if we talk specifically about self-isolation, we saw a noticeable decrease in the share of orders from SMB clients over these 3 months. Corporate clients from the regions also decided to “hold back” funds for development at the beginning of the pandemic. But at the end of May, both these and those began to return to normal life.

While private individuals, on the other hand, are buying more PCs than before. Self-isolation has shown that each family member (where parents work and children study) needs a PC.

As for the public sector clients, they did not seem to notice the crisis at all. The plans for informatization of state corporations were not canceled, all tenders were held on electronic platforms. They were much more influenced by fluctuations in the dollar and oil prices.

Denis Antsiferov: If we talk about the entire IT market, although it is considered one of the most advanced ones, in fact it turns out to be very conservative: no breakthrough technologies have appeared during the quarantine. And we are looking those trends that appeared much earlier - “clouds”, 5G, etc., which turned out to be more in demand. But this is not something new, it is the next step in the development of what we already know. Three months is too short a period for dramatic changes.

CRN/RE: Have customers' requirements for purchased equipment changed?

S.K.: I don't think so. It is possible that large companies will create a reserve of laptops for employees, specifically for force majeure situations. Everyone understands that no laptop or AIO can replace full-fledged workstations available in offices (with 2-3 monitors, etc.). Therefore, we do not expect a redistribution of the shares of different types of equipment in customer purchases.

If we talk about some newfangled tricks, they will probably come to the corporate market but definitely not now. Facial or fingerprint identification should first take root in the consumer segment. In business, and even more so in state-owned companies, they will begin to be applied much later.

After all, by and large, all these innovations are nothing more than marketing, which forces the consumer to buy something new. Otherwise, the consumer race cannot be stimulated. A private user should be interested, enchanted, delighted. And corporate consumers are more conservative: they have different needs.

D.A.: Like all world manufacturers, we have released our devices with "tricks" (AIO with faceID and small-format PC with fingerprint reader). But neither corporate nor government customers were interested in them. Therefore, as before, the basis of our sales is “ordinary” PCs: customers like them much more in terms of functionality and price.

But "cloud computing" is becoming more and more popular. They are changing the very approach to building IT infrastructure. For example, the fashion is returning to the previously popular, but half-forgotten technology, "thin client", when the minimum number of operations is performed at the workplace, and the main actions are performed on the computing resources of the company itself. During the quarantine period, almost all home laptops, all-in-ones, PCs (regardless of their capacity) that connected to remote desktops turned into "thin clients" that had to show an image and report somewhere that they pressed on the keyboard.

And while interest in this technology was earlier restrained by the development of communication channels, now the modern infrastructure is ready for the transition to work in the remote desktop mode. And the introduction of 5G technologies will only accelerate this process. Therefore, we are now working on creating a new type of device for us, a mobile "thin client".

S.K.: Look at how much is done through a smartphone: video calls, video conferencing, joint connection to work resources and documents. Developers of CAD systems create modules to organize joint work on projects, including via a smartphone. But the smartphone has one significant drawback, the form factor. It is convenient to call and watch a video, but you cannot work comfortably on it. So there is a need for a mobile device to remotely connect to the company's computing resources with a normal screen and keyboard.

CRN/RE: How are your partners feeling? Are you going to change something in your work with partners after the crisis?

S.K.: In April-May, there is usually a lull in the IT market. Therefore, we did not notice a sharp decline in sales compared to previous years.

The only trouble that can happen in the IT market is that some of its players (not necessarily our partners) will stop operating and, as a result, competition between manufacturers for the remaining partners will increase. But so far, no significant companies closed in the regions or in Moscow.

Offline retail had the hardest time during this period. But we ship orders even to these partners in accordance with the agreements. If we talk about companies working with the public sector, they have changed little: they are implementing projects that were planned last year, and are already preparing purchases for the next one. So the work is going on as usual.

During self-isolation, some of the processes in working with partners (related to the flow of finance and goods) required manual control. As for commercial interaction, we have successfully continued to work under the partnership program, which allows us to be as flexible as possible and take into account the interests of each company that cooperates with us.

And the partners' requests to us as a manufacturer have not changed after the crisis. The pandemic exaggerated the trends that we saw before: the state is becoming the main consumer of IT.

D.A .: Therefore, the requests that partners address to us as a global brand are mainly related to the initiatives that began in December 2017.

This is about the fact that competitive domestic IT vendors should appear in Russia. And we worked in this direction throughout 2018 and throughout 2019 so that partners feel confident supplying local equipment to the government order market, where more and more attention is paid to the topic of import substitution.

And this is a very difficult topic. Its development depends on what the state wants to get in the end. Until recently, all equipment manufacturers could be divided into 3 groups: foreign vendors that came to Russia only to sell; Russian companies that created their own production and brought advanced technologies to the country; and the layer between them - the gray business, the sale of counterfeit products and assemblers of PCs in garages who could afford to dump since they did not pay any duties or taxes. And the state began the topic of import substitution by fighting the gray market. Now it goes further by providing support and benefits to real Russian manufacturers.

In 2-3 years perhaps, a PC built on a domestic processor will be considered Russian. But for now, we limit the depth of real work on the localization of our devices by soldering motherboards. It seems that this is an uncomplicated process. But we ran into a lot of details when we started looking for companies that do this. Some production facilities cannot provide the proper level of quality and the volume we need (which is 10-15 thousand motherboards per month). Other enterprises are focused on working with customers from the defense industry - their approach to pricing is fundamentally different from the market, which makes cooperation with them ineffective.

But we are still moving in this direction, investing in real production. We now have 2 key manufacturers whom our orders allow to provide additional work for 100-120 people.

Of course, we do not create illusions about the place Russia occupies in the global IT market. Our processors, if we talk about their use in standard equipment, are still far inferior to foreign analogs. But if the state wants to develop this area, it is necessary to create markets for every Russian product. As it was with the Mikron plant. To load its capacity, we created a Troika card project, and all the chips that are put into cards are made by this plant. It seems to be a trifle against the background of the whole of Russia, but this is a job for more than 1000 people.

So it is with IT manufacturers. To support companies that go inland and bring new technologies to the country, the state must create and control new markets for their products, as well as guarantee demand for them.

In the meantime, we see that large Russian customers are reluctant to buy Russian-made equipment. Although our products are cheaper than similar ones from major brands. It is especially difficult to switch to new brands for those who have built their systems on solutions of specific vendors for decades. The main argument: I don’t know your products and I don’t want to be liable if something suddenly stops working. Therefore, our task is to offer the market a reliable competitive product, including one created on localized technologies, each time increasing the added value of the Russian component. And on the part of the customer, I would like more confidence in the domestic product.

S.K.: The convergence of these positions is a long way. And it is much easier if we do not go through it alone but, for example, with colleagues from the consortium whose founders we became. Then the initiatives that come from more than one company will be heard faster by the responsible executive authorities in charge of our industry.

It seems to us that in the future, one of the main challenges for IT companies serving government agencies will be to move customers to an architecture that does not depend on specific equipment brands. An example of such an infrastructure is Yandex data centers. They are designed so that their work does not depend on what kind of hardware is in them or on their number and what nodes in this data center will work simultaneously. And I am sure that sooner or later all customers will move from a mono-brand infrastructure to such "cloud" data centers that are not tied to hardware and manufacturer.

3 components are needed for this to happen as early as possible: support from the state, understanding from the customer, product and responsibility from us.

And I am very glad that the state hears and takes into account the proposals that we are submitting for discussion. But we understand that if the officials in charge of our industry promise to do everything for Russian equipment to participate in national projects, we, as manufacturers, should not let them down. By the time all government initiatives are launched, production should be ready to provide these initiatives with everything they need. And we agree with that approach. We are preparing to have a real competitive and reliable product by the time the entire regulatory framework is created. And so that "import substitution" would not be just a buzzword.

D.A.: As the experience of other countries shows, import substitution is a very important topic. So, protective duties were introduced in the countries of Latin America to revive their own industry: it was more profitable to import components and assemble equipment from them in the country than to import finished products. We also add politics to this topic. But it is important for us that attention was paid to this topic at the highest level. The import substitution program is supervised by the ministry responsible for the Russian industry development. Finally, IT began to be seen as one of the strategic resources of Russia.

And there is nothing wrong with the fact that the industry will rise at the expense of government orders as most of the world's giants have become successful thanks to government orders. Appropriate government support allows companies to become not only national but also world leaders. In turn, the state receives competitive and safe products.

CRN/RE: How “Russian” are your products?

D.A.: They meet the criteria for confirming the country of origin or country of production. Our equipment is included in the unified Register of Russian radio-electronic products, and we are developing new models that will also be included in it.

At the same time, we do not focus only on the PC: we are interested in bringing other technologies to Russia. Many people are engaged in localization of computers, but so far no one is engaged in peripherals, although all the technologies in the world have already been invented. Therefore, now we are discussing with global vendors the issues of retransmission of these technologies to Russia, and in the near future we plan to become a platform that will allow Western companies to bring more technological redistributions to our country - not only assembly plants, but also intellectual property. If we cannot find a partner in a certain market segment, our engineers are engaged in the development of new technologies, and they create products that are no worse than Western analogs.

CRN/RE: You mentioned the consortium. Why was it created and why exactly in this composition?

S.K.: In short, to synchronize the activities of market players. The state wants to understand what is happening in the IT industry, and we - what plans the state has and how long-term they are. Knowing the answers to these questions, we will not scatter investments and throw our projects into the trash can.

And these are such important issues that companies that are direct competitors have united to solve them. We create products, promote them, compete with each other. And all this is good in a market economy. But at the stage of bringing the industry out of a deplorable state, tough competition is not the best strategy. In this situation, it is necessary to synchronize efforts and determine which strategic goals are facing the state, how to decompose them at different levels, what the industry needs from the point of view of the regulatory framework, and what from the point of view of technology. The consortium of computer manufacturers includes companies that have taken all these steps before the merger. But everyone made them independently, relying on their own experience, moving towards their goals, based on their own understanding of how to do this, communicating directly with the Ministry of Industry and Trade. And at some point, they came to understand that efforts should be combined, despite the fact that we are competitors. But, for example, we all need to deal with the organization of contract manufacturing or the import of components. And it is much more effective to resolve these issues with the state together, rather than one by one.

Even when we gathered for meetings where everyone shared their vision of how the industry should develop, our proposals very often remained only proposals. The joining forces of leading computer manufacturers have lent weight to our voice and it has been heard. The Department of the radio-electronic industry is also interested in the exchange of information and the involvement of our expert resource in the assessment of legislative initiatives and the development of draft regulations aimed at strengthening the Russian radio-electronic industry and achieving the goals defined in its development strategy.

D.A.: While our remarks could drown in standard bureaucratic procedures earlier, now a paper with 8 signatures of company leaders allows us to communicate with the state much faster: the ministry accepts that there are billions of rubles in turnover, our own history, products, hundreds work places behind each of us. Therefore, the process has begun. And they really hear us.

Only 4 months have passed since the consortium was created, and the first government decisions based on our proposals have already appeared. That's why we have made an alliance. We are so different, but together we are stronger.