Relaxed Rules for Computer Exports Spur Interest in Soviet-Bloc Markets

By L. Erik Calonius and Beth Karlin, Staff Reporters
The Wall Street Journal

July 26, 1984

LONDON -- European microcomputer makers are starting to take aim at Soviet targets.

A number of companies have begun to size up potential sales to Eastern-bloc countries following the recent Western decision to relax export restrictions on the sale of some small computers to Communist nations. Few manufacturers expect an immediate bonanza, but most see sales increasing in the next few years.

The decision by Cocom -- the Coordinating Committee for Multilateral Export Controls, made up of most North Atlantic Treaty Organization members and Japan -- came after several years of tough negotiations within the organization, with the U.S. favoring tight controls.

In the end, Cocom decided to forbid the sale of 32-bit microcomputers, but agreed to drop the embargo on most eight-bit and some 16-bit computers, which are less powerful, as well as certain kinds of telecommunications equipment.

Peter Harding, managing director of Oric Products Export Ltd., says Oric is negotiating computer distributorhips in Hungary and Yugoslavia, and eventually would like to get into Russia and Czechoslovakia.

He says some two million microcomputers will be sold in Britain next year, but "I'd be surprised if there were more than 100,000 units sold in all of Eastern Europe in the next 12 months." Mr. Harding discounts rumors that the Soviets are planning to equip eight million school children with computers. But he feels confident that the Soviet bloc market could reach one million units annually within two years.

Richard Seymour, a marketing executive at Applied Computer Techniques (Holdings) PLC, says that British computer maker is approaching the new market cautiously. "Some of our component suppliers may have other ideas about our introducing their parts to Eastern bloc countries" he says. ACT plans to contact all 20 to 30 of them before proceeding, he adds.

If there aren't objections from the mostly U.S. suppliers, the company probably will try to penetrate the new market with its existing distributors, Mr. Seymour says. "We have people in Hong Kong, Singapore and Finland who may be interested in distributing in the Soviet Union," he adds.

But selling to the Soviet Union won't be easy, warns David Springle, who visited Russia recently to demonstrate Acorn Computer Group PLC's BBC microcomputers. "It's a very difficult market," says Mr. Springle. "It requires a lot of time and a lot of patience. There is no quick kill."

Mr. Springle says his trip was intended chiefly to get a foot in the door. "We said, 'Here we are; here is the product; good morning,' " he says, adding, "They didn't know us from Adam."

Sinclair Research Ltd. says it has a "fairly senior" executive evaluating market opportunities in the Eastern bloc. The company recently sold 400 of its ZX81 computers to Czechoslovakia. The small computers, which sell for as little as $53 in London, failed to make it in the U.S., where they were marketed through Timex Corp. "There's nothing else in the pipeline other than that," says a spokesman.

Not everyone thinks the Eastern bloc has much potential as a market. Jean Gerothwohl, president of Thomson S.A., a French microcomputer maker, says the company just introduced its first eight-bit products and hasn't had time to think about Eastern Europe. "We're so busy getting enough products to satisfy demand for France and Europe, I never even thought of selling machines to Eastern Europe," he says, adding a caveat that other dealers with the Soviets have found true: "You know, they don't have a lot of money there."