Retrofitting Soviet Tech (Re: Japan failing to imitate...)

[Yoshie Furuhashi <furuhashi.1@xxxxxxx>]

> [full article at http://www.latimes.com/business/20000910/t000085112.html ]
>
> Sunday, September 10, 2000
> Japan Giving Its Start-Ups a U.S. Education, With Limited Success
> Asia: It is sending fledgling firms to American incubators to learn
> entrepreneurial ways. But applicant pool is thin, and cultural barriers may
> be culprit.
>
> By EVELYN IRITANI, Times Staff Writer
>    An innovative experiment by the Japanese government to unlock the secret
> of America's entrepreneurial energies has gotten off to a rocky start.
>     By placing a handful of their most promising high-tech start-ups in
> American business incubators for several years of intensive parenting, the
> Japanese hoped to pick up some tips on high-tech nurturing and, with luck,
> grow the world's next technology giant-killer.

Were I loaded with capital & entrepreneurial ambition, I'd scavenge
the graveyard of ex-Eastern bloc technologies & find a lot of
marketable stuff -- cheap, not-so-hi-tech, & retro-chic.  Appealing
to those of us who are tired of accelerated pace of planned
obsolescence.  Very postmodern.

*****   The New York Times
September 9, 2000, Saturday, Late Edition - Final
SECTION: Section C; Page 1; Column 2; Business/Financial Desk
HEADLINE: Stalinesque Lines, But a Silky Sound;
Man, That's One Ugly Microphone
BYLINE:  By SABRINA TAVERNISE
DATELINE: TULA, Russia

A small Soviet-era factory called Oktava has a well-known fan: the
musician Sting. The reason? Its microphones.

The company, based in this small city three hours south of Moscow,
was focused primarily on weapons production in Soviet times. But
since the 1950's, when Moscow ordered mass production for everything
from recording studios to telecommunications equipment, it has been
making microphones that have lately found an unlikely global success.

Since the collapse of the Soviet Union, the company has compensated
for the lack of state purchases with unusual buyers: American and
British rock musicians. Since it began exporting in 1994, revenues
have more than doubled, mainly through the sale of the microphones,
which musicians say are cheap, high-quality and some of the ugliest
they've ever seen.

"We nicknamed it the electric razor," said Hugh Padgham, a
London-based recording engineer who has done albums for Sting and the
Police and bought an older version of the microphones about 10 years
ago. "Because it's so cheap and badly made, you're always slightly
suspicious why it should sound so good."

As creaky, Soviet-era enterprises struggle to shed outdated equipment
and oversized work forces, Oktava is thriving. It is a rarity among
Russian consumer goods companies, whose products normally cannot
compete internationally because of poor quality. But Oktava has
turned superb engineering from half a century ago into profits today.

"Tula is best known for its spice cookies, guns, and samovars," said
Gennady I. Ulyanov, Oktava's general director. "And now for its
microphones," he added with a grin.

The company is unusual because it has capitalized on its Soviet-era
expertise in a competitive industry. Stepping into the factory is
like going back in time. Receptionists answer clunky telephones that
look much like the display models in the company museum. An exhibit
titled "The First Stakhanovites" proudly displays the factory's first
labor heroes. (Stakhanov was the name of a productive miner, whom the
government held up as an heroic example in a publicity stunt in the
1930's.)

Displayed along another wall is a light pink radio the factory made
for Stalin on his 70th birthday. Company management has remained
virtually unchanged since the early 1990's.

"Nothing in particular has changed," said Mr. Ulyanov, a pleasant man
with a brilliant row of gold teeth, who was a Communist Party member
for years and who began in the plant in 1963 as a lathe operator.

It was in exactly this state that two British brothers, who would
later become Oktava's exclusive distributors, found the company in
1993. Fergus McKay and his brother, Andy, both studying to be sound
engineers, came across an Oktava microphone in their college
recording studio. They asked their father, who ran a food import
company in Moscow, to track down the factory. He returned to England
with a box full of them. But before the brothers could return for
more, the model was discontinued. They contacted the factory,
persuaded it to resume production, and signed a contract.

"It was a Russian product -- something no one had ever seen before,"
said Fergus McKay, of A & F McKay Audio Ltd. "The interest was
enormous."

Even the name of the microphone sounded threatening -- the MK 219.
Reviewers praised its sound quality but were astounded at the lack of
attention to its appearance. In 1994, when the microphones were
released, one trade magazine wrote, "extremely nice sounding mic, not
likely to get stolen," while another wrote that it looked as though
it had been "cast from an Aeroflot tea trolley." Its homeliness, in
fact, became one of its main selling points, Fergus McKay said.

Now the microphones are known throughout the world. Musicians and
sound engineers were lured first by the price -- Mr. Padgham paid
about $140 for his microphones when a comparable one made by Neuman
of Germany cost about $1,700 -- and later by the appearance. Sales at
the McKays jumped from 20 microphones a month in 1994 to about 2,000
now. Oktava's annual revenue has doubled to 500 million rubles ($18
million) since it began exporting. The quality, however, can be
spotty and does not compare with the more expensive German
microphones. The Russian mikes are bought mainly by younger and
semi-professional musicians who are starting recording studios at
home.

"The thing that kept me from wanting to buy them as a consumer is the
variability from unit to unit," said Steven Albini, a freelance
recording engineer based in Chicago who has used other Russian
microphones for about 10 years. "But if I was just starting out, I'd
be buying handfuls of them."

Mr. Albini prefers the older Russian microphones because they were
built mostly with vacuum tubes instead of transistors. As a result,
they produce a warmer, better recorded sound. Russia kept that
technology for years after American producers abandoned it. He
frequently uses microphones made in the 1950's by the St.
Petersburg-based company LOMO, and has recorded albums for P J
Harvey, Nirvana, Robert Plant and Jimmy Page with them. Oktava plans
to re-release an old-style microphone by the end of the year.

Russian-made products are inexpensive, in part because labor and
local materials cost far less than in Western markets. Most of the
components Oktava uses are domestically produced. The average salary
at the plant is about 1,300 rubles, or about $50 a month. Though the
factory is still sprawling, with a work force of about 2,000, that is
down from 5,000 just after the collapse of the Soviet Union.

Still, the success of its microphones abroad has not erased all
financial difficulties at home. The company is paying off the tax
debt it racked up in the early 1990's, before it found new buyers.
Without any bank loans or outside investors it often runs short of
capital to expand.

Despite his long history as a plant worker, Mr. Ulyanov, 59, has
adapted to management well. The company opened a marketing department
in the early 1990's to compete better domestically. It has also
bought new equipment. It now exports about 30 percent of what it
produces, up from 6 percent just after the Soviet collapse.

The government owns about 60 percent of the company, while private
shareholders, mostly workers, own the rest, said Mr. Ulyanov, who
himself owns 1 percent. It was founded in 1927, and produced mostly
radios and loudspeakers until the 1950's.

Russian musicians most often find Oktava when flipping through glossy
Western music magazines, Mr. Ulyanov said. "Made in Russia" has meant
poor quality for so long that most seek imported goods when they want
high technology.

"They call us and say, 'It can't be you -- here, in Russia, in Tula?'
" he said.

GRAPHIC: Photo: Gennady I. Ulyanov, Oktava's general director, with
one of the company's much-sought-after microphones. The sound may be
great, but the mike looks like something that Edward R. Murrow might
have been clutching during the Battle of Britain. (James Hill for The
New York Times)   *****

And check out http://www.lomo.com/.

Yoshie