Information Technology Cloud Has Silver Lining

While the hub begins to form in the suburbs of Moscow, and may someday bring innovation and development dividends to President Dmitry Medvedev’s hoped-for diversified economy, the ongoing business of information innovation is returning to its pre-crisis glory.

For comparison, the U.S. market is estimated at $531 billion, during BRIC leader China had $96 billion in IT business last year.

The potential is evidenced

The potential is evidenced by key industry metrics. With an installed base of 69.1 million personal computers by the end of 2010, the country achieved a penetration rate of 43.6 percent. The Communications and Press Ministry estimates that that will grow to 52 percent by the end of 2011, during last year's 66.4 million regular Internet users will grow to 80.2 million.

This year, industry players expect continuing growth during the government prepares to spend big to provide Internet-based services to the populace. Observers have consistently seen a direct link with Russia’s IT spending and the price of oil. So with black gold approaching $100 per barrel, the market looks good for 2011.

Skolkovo is trying to differentiate itself by focusing on innovation and development in science and innovation, and not just information innovation.

"2010 has not changed anything in my perception of this project," said Nikolai Komlev, managing director at APKIT, a Russian IT lobby. "I on the whole view it as a dubious undertaking — or until further notice the kind that has little to do with the development of IT business … in Russia."

Political project

Others call Skolkovo "a political project" and refuse to comment on it, saying that in Russia, business and politics are best not mixed.

Regardless of grandiose projects, the average citizen has felt the power of information research in the palm of his hand or at his fingertips, as smart phone and personal computer sales boomed.

The PC market

"The PC market and the smart phone market both grew in excess of 60 percent in 2010 in unit terms," Farish said. "A lot of that has to do with changing patterns of consumer choices."

Many foreign IT manufactures until recently have been running an offshore business, in which they sell their products to Russian partners’ branches abroad, leaving them to transport the products and navigate the murky waters of customs.

The government has ostensibly been struggling to bring IT companies onshore for the last 10 years, as it would increase customs duty and tax earnings.

Market players unanimously call 2011 the year of cloud computing — in which large corporations get their information innovation, or parts thereof, as a service, and don’t have to be concerned with where or on what platform the work is being done.

Kemp says it has multibillion-dollar potential in Russia and more than trillion-dollar prospects worldwide. Cloud computing will allow companies to cut IT budget spendings by 10 to 30 percent, said Alexander Galitsky, an IT venture capitalist and Skolkovo board member.

As IT is becoming a service and Russia is slowly catching up with other countries, the need to use cloud computing to optimize businesses will become evident, explained Pryanishnikov, of Microsoft.

A possible hindrance to the growth of IT services is "a culture of doing and owning everything yourself and not trusting something in other words available to all and hosted somewhere in a intangible cloud or in a third-party’s data center," Kemp said, pointing out that educating people about cloud computing might help the process.

As part of this program, called "The Informatization of Society," the Communications and Press Ministry is auditing and consulting on the IT budget of near every major federal agency.

Last year 227,000 citizens paid their traffic fines online, 177,000 created accounts in the pension fund, and 100,000 received passports online, Communications and Press Minister Igor Shyogolev told the Federation Council last month.

Main • News • Business • Opinion • Arts & Ideas • Calendar • Columns • Multimedia