FOCUS: Ministry seen hardly to make gadget makers to preinstall local software

By Yekaterina Yezhova

MOSCOW, Jul 8 (PRIME) -- Russia’s Digital Development Ministry wants to oblige smartphone and tablet producers to preinstall local applications on devices sold in the country, the initiative some analysts doubt would materialize and force producers like Apple to quit the market as a consequence, while others say it is common practice for manufacturers to adapt gadgets to local conditions.

“The authority earlier mentioned such plans and I think the bill won’t be a success this time,” Vadim Merkulov, head of the research department at investment company Freedom Finance, said in a note.

“First, manufacturers and developers have contracts under which applications are installed on a commercial basis for operating system Android. Second, one of the biggest smartphone manufacturers, Apple, does not preinstall applications on any market. Third, the move reduces competition and raises the corruption component since officials will decide which software will be preinstalled on the phones.”

The ministry elaborated the draft amendments to the law on connection, and the document should be released shortly for public discussion.

A similar idea was put forward by the Federal Antimonopoly Service in January and was criticized by the society and the ministry then.

On July 3, Liberal Democratic Party deputy Sergei Zhigarev submitted amendments to the State Duma, the parliament’s lower house, seeking to ban the sale of smartphones and computers without local software, but withdrew them on July 4.

At present, local applications can be installed on smartphones only on commercial terms and only on Android devices, since Apple does not install other firms’ software on its iOS-run devices.

“If the decision is made on the government level, it would probably raise prices of devices,” news and research agency TelecomDaily General Director Denis Kuskov told PRIME.

“The country sells some 30 million smartphones every year, which is a large market. If manufacturers decide to leave the country, they’ll do it as a matter of principle. It’d be strange if Apple quits.”

Merkulov does not think Apple would leave the country’s market either.

Mobile electronics retailer Svyaznoy-Euroset calculated that nationwide smartphone sales went up 7.5% on the year to 104 billion rubles in April–June and 3.5% to more than 6.6 million units. The average price rose 4% to 15,700 rubles.

Group of companies Finam analyst Alexei Korenev sees nothing complicated or new in preliminary installation of most of popular applications on smartphones. “In AppStore and Google Play on smartphones sold in Russia one can find lots of applications for the use in our country. Such applications are tied to local suppliers of services and many of them are designed by Russian developers,” he said.

“This is so because a huge part of applications used in the country is designed from the very beginning for our people, like any services connected to the state services, the weather, train or plane timetables, theatre guides, purchase or sale of goods, food delivery, taxi hailing and so forth.”

Manufacturers seek to provide their customers with a whole range of all possible services adapted to a region, including applications, since it would push brand loyalty higher.

“So, worries about preinstallation of software initially focused on Russian users or about a possible leaving of any makers are exaggerated,” Korenev told PRIME.

“The situation is not only about Russia. Any smartphone manufacturer when entering a market adapts products and embeds options for further expansion of services for the needs of a target audience.” 

The country’s two top Internet companies, Yandex and Mail.Ru Group, would yield much from the initiative if it takes place.

“It’s hard to say which of the two IT-giants – Yandex or Mail.Ru – will gain most, because they are fighting for the consumer tooth and nail with varying success. You only have to look at the fast-developing sector of artificial intelligence on the whole and voice assistants in particular to understand that the battle will be hard,” Korenev said.

(63.5841 rubles – U.S. $1)

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