IBM and Skolkovo plan collaborations
Russia’s innovation city being built in Skolkovo is still a work in progress, but it has already established partnerships with big-name international brands.
The Skolkovo innovation village, often called “Russia’s Silicon Valley”, has to date joined forces with more 200 partners. One of the latest companies to join is IBM, which has signed agreements to drive innovation in Russia and establish a science and technology centre employing up to 150 technical staff by the end of 2012.
IBM and Skolkovo plan collaborations on areas of mutual interest, including the oil and gas industries, and business analytics technologies to improve road safety.
Construction of the innovation centre only began a year ago, and there is still much work to be done. But despite it being a work in progress, the founders have high hopes that it will become not only the engine of the Russian economy, but a major player in global research and development.
Sceptics have branded the whole concept a pipe dream, but as more and more big-name companies sign up, their criticism appears increasingly misplaced.
The place is already making its mark in the Russian consciousness. Skolkovo as a brand is widely known; it is responsible for more words with the prefix “nano” popping up in everyday language, along with the use of the buzzwords “innovation” and “modernisation”.
Skolkovo has also revived an older Russian acronym: NIOKR, which is basically the Russian equivalent of R&D. It refers to a full-cycle research centre where scientists come up with a new technology, build a pilot product, test it, and, if the test is successful, launch it into mass production. In the US, $382.6bn (£245.6bn) or 2.7pc of its GDP, is spent each year on research and development.
In contrast, Russian firms currently spend just a little over $23bn, which is 1pc of GDP.
Skolkovo’s ambitious managers are trying to create a framework that will attract foreign companies to carry out cutting-edge research. Roman Romanovsky, Skolkovo’s operating director for key partners, says: “Our main task now is to create the most comfortable conditions and environment. innovation centres are usually thought to be exclusively aimed at start-ups, but that’s not the case. Nor are we committed only to corporate research. We seek to make the circulation of ideas at Skolkovo constant, so that everyone can find what they come here for. Major companies would get young talent, start-ups would meet investors and investors would get promising new ideas, and so on.”
Many foreign companies have already signed agreements to open research centres at Skolkovo, while others have given verbal assurances of participation. In addition to IBM, the German electronics giant Siemens has signed an agreement for the phased development of its operations in Skolkovo. By 2015, it will have a staff of 150 at the centre. The total joint investments will be about $80m, with $50m to be put up by Siemens and $30m by Skolkovo Foundation grants.
“For us, [Skolkovo] is interesting as a pilot project that will transform Russia’s future,” says Alexander Averyanov, head of the Siemens project at Skolkovo. “It’s no coincidence that Siemens CEO Peter Löscher is a member of the Skolkovo Foundation Board. We are also co-operating with the foundation to promote the Skolkovo brand around the world, and are dealing with the infrastructure issues.”
Siemens has not disclosed any details of the project, but it is likely to be related to radioisotope diagnosis. The first grant of more than $4m has already been issued for the research project.
Nokia, Finland’s mobile phone giant, has a somewhat different vision of its partnership with the foundation, with a focus on inventing and introducing inline production of everyday devices. “[Skolkovo Foundation Head Viktor] Vekselberg and I signed an agreement confirming the specific stages of the centre’s development,” says Nokia representative Tatiana Oberemova.
“The centre will develop powerful mobile computing systems and offer solutions in the field of nanotechnology. Nokia’s investments in the centre amount to a double-digit number in the millions of euros, which is the standard budget for Nokia’s R&D centres.”
The Nokia project is planned to develop at a dizzying pace: the construction contract was signed in June and the building was due to be completed in December. Nokia hopes to construct laboratories and also wants to develop large-scale commercialisation projects involving mass production of electronic devices using nanotechnology.
Nokia’s competitor Ericsson sees Skolkovo as an excellent platform for research in the sphere of telecommunications, cloud and telematics technologies. Its first research effort will be smart power supply networks designed to save energy. These smart meters installed into phones will allow users to constantly provide information to distribution companies, allowing both the company and the consumer to monitor consumption patterns more closely.
Ericsson vice-president Mikhail Podoprygalov, who specialises in work with government agencies, says: “There was a lot of talk about the need to develop our economy, non-commodity exports, and now we have a place, an ecosystem where this can be accomplished.”
But not everyone has been so positive about Skolkovo’s potential. Timofei Shatskikh, a financial analyst with RosBusinessConsulting, says: “Until the first project is implemented, in the minds of most Russians, not to mention domestic investors, it will remain just another ambitious government idea.
“People don’t see Skolkovo as a scientific institution, but rather as a political one aimed at projecting a positive image. Even the foundation’s established partnerships with Western companies cannot dissuade them of this. Until the first scientific idea that germinated within the walls of Skolkovo is presented, that opinion won’t change. The creation of several R&D centres may rectify the situation. Then you can at least argue that the generation of new ideas will happen serially.”
Bright Capital fund’s Vadim Kulikov disagrees. “By attracting private investments, Skolkovo shows that not only Russia’s president, but also the market believes in the project,” he says.
According to the chief investment officer of the Skolkovo Foundation, Alexander Lupachev, the Foundation has raised $265m from 22 ventures and direct investment funds, and it has already invested $70m in a number of new ventures.
These figures are proof enough that the innovation centre is a reality and not just a concept.
Viktor Vekselberg - President of Skolkovo Foundation
“The agreements signed between IBM and the Skolkovo Foundation lay out a roadmap for our future collaboration, and provide a framework around which our two organisations can drive innovation in Russia. With IBM’s experience and leadership in R&D and Skolkovo’s huge focus on innovation, the partnership has great potential for Russia.
150 is the number of technical staff IBM hopes to have working in its new research centre due to be built at the Skolkovo city by the end of 2012.
$30 million – the amount the Skolkovo Foundation has
committed to contribute in grants to the Siemens Skolkovo project alone.
$265 million – the total amount to date raised by the Skolkovo Foundation from 22 business ventures and from direct investment funds.