Did the Russian state buy a lemon when it piled at least $200 million into a high-tech startup and its entrepreneurial e-reader project?
That's reportedly what fully state-owned Rusnano (Russian Corporation of Nanotechnologies) paid for a 25-percent stake in Plastic Logic, a California-based developer of flexible computer screens and other products that use "the highly disruptive technology of plastic electronics," according to its website
. More was presumably spent to distribute around 1,000 of Plastic Logic's ruggedly designed electronic textbooks free of charge to schools in six regions of Russia.
Rusnano was launched as a deep-pocketed venture with the lofty goal of leading the way in creating a $29 billion line of Russian products by 2015, according to a "Wall Street Journal" interview
with its head, Yeltsin-era privatization architect and former Deputy Prime Minister Anatoly Chubais. Instead, reports suggest it's lost handfuls of cash despite its connections.
Plastic Logic's entry in the exploding e-reader market is a light, shatterproof, soft-touch device with four gigabytes of storage and an 800-megahertz processor.
The gadget was touted as "the textbook of the future" in a "Telegraph" online supplement
in October that probably said as much about the sketchy nature of outsourced supplements (this one, called "Russia Now," was produced by "Rossiskaya gazeta") as it did about digital tools like e-readers.
But now Plastic Logic has suffered a "disruption" of its own.
that the joint venture between Cambridge University's Cavendish Laboratory and Rusnano is walking away from its e-reader:
...[O]n 16 May, Plastic Logic announced that it was abandoning its e-reader plans and closing its development plant in the United States. Instead, the company will try to sell its flexible-display technology to other companies that might want to use it in their own products.
So the big boys are safe for the moment with their Kindles and Nooks and iPads.
But the Russians are undeterred and remain in it for the longer haul, according to a senior Rusnano executive.
Georgiy Kolpachev, managing director of investments at Rusnano, says that it is disappointing that the market and margins weren't right for Plastic Logic's e-reader, but that "it's a reality of life." Plastic Logic still has a competitive advantage, says Kolpachev, because the company has shown that organic electronic devices can be made on an industrial scale -- in this case in a facility in Dresden, Germany. Rusnano’s investment in Plastic Logic was never just about making an e-reader for Russia, he adds, saying that his company remains committed to the firm.
It's unclear how well the Plastic Logic e-readers were received by Russian students, who might be reluctant to adopt a device that doesn't support either games or Internet browsing.
They were the primary culprit in the demise of Plastic Logic's strategy, according to at least one analyst. After all, they're such children:
The move comes as no surprise to Jon Melnick, an analyst at Lux Research in Boston who specialises in electronics and innovation. Plastic Logic’s technology was too expensive to compete with other e-reader manufacturers, he says, adding that a robust e-reader that would be safe in the hands of a clumsy child isn't a viable market. "At a cost of four or five times what a traditional e-reader costs, it just isn't worth it. No kid is that clumsy."
-- Andy Heil