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Tit-for-tat Tech War Sees Russia Set for Proprietary Smartphone OS

State-sector ponders mass move to Sailfish OS as Russia-US mutual tech mistrust continues to simmer.

Photo: Lost connection: Is Russia-US polarisation ushering in a new era of technological apartheid?
Lost connection: Is Russia-US polarisation ushering in a new era of technological apartheid?
Photo: Lost connection: Is Russia-US polarisation ushering in a new era of technological apartheid?
Lost connection: Is Russia-US polarisation ushering in a new era of technological apartheid?

Russia is one step closer to having a proprietary smartphone operating system as Rostelecom, the state-owned telephone and internet giant, looks to tie federal and regional officials into a deal that would see only handsets using the company's recently-acquired Sailfish OS approved for government use. At present, the Russian Federal Ministry of Communications is considering the company's proposal, with ultimate agreement seen as little more than a formality.

The move is seen as yet another consequence of the declining relationship between Russia and the US and its EU allies. While US / EU sanctions have been in place since the 2014 Russian military intervention in Ukraine, the lack of trust between the two sides has also played out in the high-tech arena. In December last year, Donald Trump, the US President, implemented a nationwide ban on the Kaspersky Anti-Virus system, maintaining that the Moscow-based cybersecurity firm behind it had ties to the Kremlin, with the software itself representing "a grave risk to national security".

Back in 2014, Russia came close to banning the iPhone and other Apple products, supposedly over concerns that their access to the iCloud storage facility could compromise national security. More recently, Russia blocked 20 million Amazon and Google IP addresses as it sought to end access to Telegram, a cloud-based instant-messaging service. The move came when Pavel Durov, the exiled Russian who created the service, defied a court order to hand over the system's encryption keys to Russia's Federal Security Service – the successor to the KGB – which would then have had access to all user-generated content.

Looking to capitalise on this reluctance to use overseas-sourced communication devices on the part of many Russian officials, Rostelecom is now consulting widely with a variety of the country's ministries and other official bodies. Clearly confident of success, a number of Russian manufacturers have already indicated that they have been approached about producing a range of smartphones that will solely operate on the Sailfish system.

The move has clearly been long-planned and well-coordinated, although the strategy only became publicly-apparent in March this year when Rostelecom acquired a 75% stake in two existing Russian businesses – Open Mobile Platform (the developer of the Russian Sailfish OS) and Votron (the majority stakeholder in Jolla, the Swedish firm that originally developed the Sailfish system). Conveniently, both businesses were owned by Grigory Berezkin, with the Russian entrepreneur said have benefited by as much as US$50 million on account of the takeover.

In light of the fact that the sanctions and the ongoing war of words have created a climate chillier than that at the height of the cold war, there is every expectation that a US-proof smartphone OS might well take root in Russia. There is even something of a precedent in that, two years ago, neighbouring Kazakhstan, itself a former Soviet Republic, banned the use of smartphones in all government buildings, including police stations, in a bid to stem a series of embarrassing leaks. With all civil servants threatened with body searches before entering official premises, the move triggered a surge in demand for old-school mobile phones, which had no camera facility and offered no access the internet.

In spite of this move on the part of the state sector, it is most unlikely that IOS and Android smartphones will be abandoned by the majority of Russian consumers. Having said that, a significant pool of Sailfish users could be created if, as planned, employees throughout the public sector are obliged to use only state-sanctioned smartphones, a decision that could impact upon countless local government officials, police officers, first responders and even teaching and railway staff.

Given the huge jump in Sailfish user numbers expected next year – the earliest point at which the initiative could realistically get off the ground – there is clearly an opportunity for ambitious and nimble Hong Kong OEM / ODM manufacturers, agents and distributors to get involved at this early stage, providing they are geared up to deliver a high volume of handsets in what will necessarily be a tight turnaround time. Apart from handsets, of course, there will also be demand for compatible accessories, most obviously cases, batteries and chargers.

It is also highly likely that a market will open up above and beyond the state sector. With Russian Post, the national mail carrier, all but certain to act as one of the sales channels, this will see Sailfish handsets available via the retail operations of many of its existing clients, including the Russian equivalent of the Army and Navy Store and the retail outlets that serve the country's penal system.

Given the bespoke nature of the new OS, there will also be scope for developers to create new apps that are compatible with its architecture. In particular, there will be demand for messenger services that can fill the gap left by Telegram, as well as payment apps compatible with the existing Mir system, Russia's national card-payment system, which was itself created post-2014 when many western banks declined to process Russia-initiated transactions.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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