Abstract

Main Features of the Russian PC Market

Large Market Potential

Due to the emphasis placed on scientific education in Russia, there is already a certain level of demand for PCs. In addition, increasing incomes and low PC penetration rates mean there is considerable room for PC growth. Adding favorable government policy and the expected entry to the WTO, and the potential for development of the Russian PC market is substantial.  

Urban Areas Are Main Battleground

As the population, government institutions, and corporations are concentrated in urban areas, and economic development in these areas is also stronger, most PC purchases are made in these areas. For PC manufacturers, controlling the few but important urban markets will allow them to control the entire PC market; therefore, urban areas have been the most significant for PC makers. 

SMB and Home Markets Becoming More Important

Thanks to government policy and legal protection, the number of SMBs and their contribution to the nation-wide GDP level is growing. Due to the growing level of computerization in SMBs, the next wave of growth momentum for the business PC segment will derive from SMBs. As a result, the SMB market is becoming increasingly important. Meanwhile, as disposable household incomes are increasing, the home PC market is also growing. Both segments will become critical market segments for PC makers.

Retailers Are Mainstream Channels

Due to low Internet penetration, immature online sales environment, and consumer habits, consumers still prefer to buy PCs from bricks-and-mortar retailers. Until this situation changes, virtual retailers will have difficulty gaining dominance in Russia and the retailers with store outlets will remain key.

Price Declines

The majority of desktop PCs have fallen in the US$500 - US$800 price range and notebook PCs to less than US$1000, indicating that Russian consumers are more focused on low-price models, putting high-priced models under great pressure. 

Trends in the Russian Market

Population Concentration Intensifies

There is a very strong tendency for the population to concentrate in urban areas. As the government focuses development in major cities, population density increases, especially in the capital of Moscow and industrial cities such as St. Petersburg. Under such conditions, urban areas will be the major market, both for business and home PCs.

Economic Growth to Continue

As energy prices have remained high, Russia, with its ample reserves of energy, has the fundamentals for economic growth. As the economic structure of the nation gradually shifts towards high-tech goods, the economy will grow further. With government and personal incomes continuing to rise, the overall PC market and individual segments have been growing, especially the home PC sector, where penetration has remained low.

Consolidation among Manufacturers and Channel Players

While infrastructure construction continues, the Internet penetration is unlikely to grow to the same degree as in Western Europe or the United States. For this reason, bricks-and-mortar retailers will remain dominant channels. After the Internet becomes more widespread and Russian consumers change their buying habits, there will be opportunities for virtual distributors. Currently, manufacturers and distributors will cooperate more closely, even to the extent of merging for the sake of better profit and development.