Soviets Pick Irvine Firm to Supply PCs for Schools

In what could prove to be a major business coup, a small Irvine company has been picked to supply personal computers to schools in the Soviet Union and assist the Soviets in establishing their own PC industry.

Phoenix Group International, a high-technology consulting firm, beat out 16 other companies for the job because it agreed to financial terms favorable to the Soviets and to help the Soviets build their own PCs rather them buying them from abroad, Soviet officials said Monday at a New York news conference.

Soviet officials said the joint venture with Phoenix Group is part of a government plan to place 3 million PCs in Soviet classrooms and 3 million more in Soviet businesses by 1994.

Selection a Surprise

U.S. and other Western computer makers have been eager to tap the potentially huge Soviet computer market. But the market has been slow to develop, largely because of tight U.S. export controls and the Soviets’ limited access to foreign currencies, which limits their ability to buy technology from abroad.

Phoenix Chairman Charles W. Missler, a former chief executive of Western Digital Corp., an Irvine computer company, said the joint venture provides “a very substantial opportunity for us.” Phoenix Group officials declined to estimate the amount of sales that they expect the deal to generate.

Jack B. Spencer, Phoenix’s chief financial officer, said the company “hopes for an expanded relationship and a substantial profit in the future.”

The selection of Phoenix, a publicly held company that broke even on sales of about $10 million over the past 12 months, was something of a surprise, given the competition for the deal from 16 other companies, including some from Canada, West Germany, France, Austria, Singapore and the Eastern Bloc.

Phoenix Group officials said they did not know if any other U.S. firms had bid for the deal.

Desired Independence

Steven Popper, a Rand Corp. economist who specializes in Eastern Bloc technology issues, said the Soviets “may have picked a small company so the Soviet business would be an important piece of (Phoenix’s) business and they would be very accommodating to the Soviet interests. I imagine the Soviets were also able to get a good price.”

V. V. Krynkin, an official of the Soviet State Committee for Public Education, said Phoenix Group was picked because it did not insist on being paid entirely in dollars and would help the Soviets build their own computer factory.

“We offered them something that we thought would allow them to become a self-sustaining organization,” said Phoenix’s Spencer. “They want to be able to manufacture and service their own computers.”

Phoenix Group and the Soviets each will own 50% of the joint venture, to be known as Samcom, and will share equally in any profits. Phoenix has also agreed to provide the Soviets with 50% of the profits of American PC, a small Irvine computer maker that will manufacture the equipment being sold to the Soviets. Phoenix owns 66% of American PC.

Soviet trade experts cautioned that Soviet plans for modernizing their computer industry haven’t always lived up to their billing.

“Every so often the Soviets go on a computerization campaign and nothing ever comes of it,” said Rand’s Popper.

“There’s been a lot of talk and no action because of a niggardly allocation of resources and bureaucratic fights between ministries.”

The Associated Press contributed to this story.