Central Europe Review: politics, society and culture in Central and Eastern Europe
Vol 1, No 5, 26 July 1999

I N F O  T E C H N O L O G Y:
Hungarian IT
Past and Present

A brief history and current trends

"Blade Runner"

Hungary has always been at the cutting edge of information technology (IT). Unfortunately, during the 40-year Communist era, the country slipped from the top of the overall league table, though in certain fields, Hungary was able to maintain its position. Recently, Hungarians have begun catching up once again.

In the 18th century, one of the great wonders of the world was Farkas Kemplen's chess playing machine. Its secret was revealed long after it had amazed audiences: a dwarf hid inside, monitoring the state of play with the help of an ingenious system of mirrors, moving the pieces with a complex set of mechanical devices. The chess playing machine cannot exactly be considered one of the first milestones of IT development, but it was highly successful in capturing the imagination of the crowned heads of Europe and in persuading them to part with not insubstantial amounts of hard cash as well.

The first major Hungarian achievement in the early IT sector is linked to the name of Tivadar Puskas and his ground-breaking work in switching and transfer technology. After its invention in the last century, the basic telephone's initial use (and usefulness) was very limited, as it could only provide connections on a point-to-point basis, such as we still encounter today with field communications between temporary military encampments. Tivadar Puskas's bright idea, that of the telephone exchange, made it possible for calls to be transmitted from virtually any telephone to any other telephone. This development was of the utmost importance in communications, not just for the traditional telephone, but also for later fax and Internet technologies.

Two pioneers

In the course of the 20th century, every modern country has contributed to the evolution of the IT industry through invention, refinement and research. I would like to pick out just two names at random from the ranks of the many Hungarian pioneers I could mention.

The first was one of the most brilliant mathematicians of the century, John von Neumann, or Janos Neumann, born and bred in Budapest. He attended a highly renowned grammar school in the Hungarian capital, completing his studies there before embarking on a career that would earn him a place in the mathematics hall of fame.

Neumann lived through the Second World War in the United States, where he took part in the work that led to the creation of the atomic bomb. After the War, he focused his attention on the cognitive processes of the brain, and on computers. This latter interest led him to formulate a method of computer function at the end of the 1950s: data and the commands linked to the data should be stored in a single location and in identical form within the computer's memory. Only the computer could determine - and this only on the basis of the sequence of commands - whether the current memory space was occupied by data or by commands. For various reasons, including speed and security, this method has been rendered partially obsolete, but today's computers do still use the same possible values for data and commands.

The second famous figure is Andrew Groove, or, in true Hungarian style, Andras Grof. His company was the first to create the microprocessor, a flexibly programmable instrument placed on a silicon chip. This miracle of modern technology is extremely versatile, its uses ranging from ABS systems in cars through PCs to musical greeting cards; such a range is testimony to its supreme ability to perform any task involving calculating or controlling.

As has already become apparent from the two examples cited above, Hungarian talents have sadly not been allowed to blossom at home. In order to give a clearer picture of the ebb and flow of events, we can distinguish between the following eras in a rough guide to computing in Hungary;

The 1950s: days of heroic struggle

In this period, developments were strikingly similar to those that took place elsewhere, with a handful of exceptionally gifted individuals constructing mechanical or relay-based calculating machines and computers.

The first real breakthrough occurred at the beginning of the 1950s, when a small but enthusiastic group of academy scientists put together the first Hungarian electronic computer using documentation about the Russian URAL-3. They managed to make some alterations to the original plan and ended up with a usable computer.

1960 to 1980: socialist "progress"

The major realisation at the beginning of this period was that American computers, particularly those produced by IBM and Digital, represented the most advanced and the most reliable technology. Because of the constraints imposed by CoCom [non-Communist countries during the Cold War established the Co-ordinating Committee (CoCom) to list sensitive Western technologies that were not allowed to be exported East, ed.], these computers and their component parts could not be acquired directly.

In the end, the solution was for the Communist bloc - the Council for Mutual Economic Assistance (COMECON) countries - to manufacture their own computers, spare parts, software and operating systems. In actuality, they pirated Western technology and made clones, but the quality of the COMECON-produced components never matched that of the originals, which explains why failures and crashes were monotonously regular occurrences.

A common solution to this problem was for individual buyers, for example individual companies, to exploit the compatibility factor by purchasing original components through middlemen. Often the type of component thus acquired was data storage equipment using magnetic tape or magnetic cylinders. Although they were mostly second-hand, they were still more reliable than the pirate clones.

In those days, software theft was completely normal - almost compulsory. IBM would have been taken by surprise if they had received a bank transfer paying for a VMS operating system from, let's say, the Ganz engineering works in socialist Hungary which ran on a socialist hard drive. There was no shortage of serious operating systems being cobbled together from an original American code with modifications by the Germans and Russians further supplemented by Hungarian add-ons.

This traditional practice still has a considerable influence today. It is the origin of the prevailing industry attitude toward software piracy in Hungary and in Central and Eastern Europe in general. Then, as now, it is considered normal to buy hardware but steal or copy the software to go with it.

The TPA computers made by KFKI in Hungary are an interesting case study. From the beginning of the 1970s onwards, KFKI had completely unravelled the workings of the computers marketed by Digital under the name of PDP or VAX and launched their own product, TPA, as a computer compatible with them. As a result, at the start of the 1990s, when Digital finally arrived on the Hungarian scene, they were surprised to encounter a veritable cult following for Digital's computers. They were also able to sell their most advanced products without the slightest hitch or setback, as a corps of well-prepared experts in both the hardware and the software sectors were primed and ready to offer end-user support.

In terms of office technology, Hungary in those days, and in the preceding era as well, lagged light years behind the West. If you were really lucky, you might have access to a mechanical, hand-operated calculator to help you with the most basic of arithmetical operations (addition, subtraction, multiplication, division). Electronic typewriters were practically non-existent, and writing specimens, which were subsequently lodged with the police, were compiled from every single typewriter to ensure that the author of any anti-Communist leaflet could be apprehended quickly.

As for copiers, they were only rarely available, and you had to submit one duplicate of every page copied to prove that you had not been using the copier for the preparation of those dreaded anti-Communist leaflets.

Developing the telephone network was wilfully and deliberately neglected; the Hungarian authorities preferring a slightly less obvious modus operandi to that of their Romanian counterparts. In the communications sector, Hungary's level was on par with the third world. The average waiting time between applying for and actually receiving your telephone was around ten years. The gravity and absurdity of this situation was amply demonstrated by a speech made in the Hungarian Parliament by a member calling for a new bill which would make the application for a telephone inheritable.

1980 to 1990: the microcomputer revolution and micro companies

This period of technological stagnation persisted right through to the beginning of the 1980s, when the first personal computers hit the American and Western European markets. Private imports - primarily by diplomats and high-ranking officials in representations and missions - meant that the first PCs arrived in Hungary at a relatively early stage, though at ridiculously exorbitant prices. By way of illustration, in the mid-1980s, the average wage of a Hungarian worker was about 4,000 forints, while the price tag for an original IBM PC was somewhere in the region of 1,500,000 forints.

The bulk of these first computers were, of course, not bought by private individuals, but by companies for which money was no object (remember, this was an economy where there was not so much a shortage of money as a scarcity of goods). For a long time, it seemed as if the microcomputer revolution would be kept beyond the country's frontiers.

In 1984, the Hungarian government, succumbing to Western pressure, relaxed conditions for its citizens travelling to the West. At the same time, the government authorised a reduction in customs duties on 8-byte microcomputers and VHS videos in the full knowledge that they would be smuggled into the country (and back out again) at prices that would guarantee a ready sale. The stipulation that the equipment concerned could not be sold on for a period of three years was an attempt to retain some measure of regulatory control.

In the same year, the new half-socialist, half-capitalist hybrid companies were given the go-ahead in Hungary. Both individual firms and partnership-based companies could now operate legally. This led to explosive growth in the number of IT companies in the country.

Since the entrepreneurial sphere under socialism enjoyed a massive absorptive capacity and since there were, for all practical intents and purposes, no restrictions placed on them as far as market outlay was concerned, the market was virtually boundless for small businesses. Moreover, they were able to coexist with socialist companies in a kind of symbiotic relationship.

Competition amongst these, at the beginning at least, very rudimentary firms centred around filling the order books, and it was this competition that gave many young experts their first taste of what it was like to work in the hardware and programming markets, giving them invaluable experience for the future. As a result, in 1990, they were more easily able to adapt to the brave new world of capitalism that awaited them.

The Hungarian government then in power was quick to latch on to the strategic importance of IT (although the concept of IT in those days was restricted entirely to computers). In the first half of the 1980s, a campaign to introduce computers into schools had been launched. This meant that microcomputers became commonplace in higher education, before putting in an appearance at secondary school and even primary school levels (though, to be strictly accurate, in the 1970s already, computer-assisted teaching was on the curriculum of universities and of a few privileged secondary schools).

Children proved to be very receptive to computers, though they used them primarily for playing games. In spite of this, the 20-year-olds of today have been given the opportunity to learn how to use computers and how to programme them. The length of courses varies, but the importance of the availability of such teaching for them should not be underestimated. It means that they are now in a comparable position with their Western peers. Sadly, however, for those who do not pursue their computer studies beyond the most basic levels, the likelihood of acquiring even the most rudimentary knowledge of IT is relatively small.

In a slightly schizophrenic way, the office technology sector split off entirely from the specialised field of computer science, leading to a further decline in its fortunes compared with the boom in the West. Even as late as 1988, it was still impossible to use a photocopier without a special permit. This meant that stencil duplicators were still being used as they had been thirty years earlier.

The paradoxical nature of the situation is thrown into high relief when you realise that, during the same period, anyone could import a dot matrix printer together with their computer. In a matter of hours such a printer could have been used to produce vast quantities of anti-Communist leaflets, provided, of course, that anyone would have wanted to take the time and trouble to strike such a blow against a paranoid Communist regime in its dying days.

The troubles of the telephone network became catastrophic. Demand from the new companies and from the public at large only increased. The problem of a chronic lack of resources was exacerbated by a matching lack of political will on the part of the government (the Communist Party), which meant that there was no prospect whatsoever of improvement.

1990 to 1999: catching up

Once the winds of change had blown through the country, Hungary was left in a position similar to that of the occupant of a once beautiful house that has been allowed to go to rack and ruin and who insists on living in the best room. When he gets round to visiting the neighbours, he realises that even the humblest room next door is like a palace compared with his showpiece.

Hungarians had always been oh so proud of the fact that we had a fairly broad range of wares to choose from, and that we suffered no shortage of basic consumer goods - or, if we did have shortages, they only applied to a very limited number of products and they did not last very long. If we ever did get as far as the West, it seemed to us like a mirage, an impossible fairy tale that had no place in our world whatsoever.

Once the changes had set in, it became apparent that our relatively high level of attainment in the IT sector (compared to our neighbours) was actually a relatively high level of backwardness compared with the countries of the West. In the computer sector, our supplies of hardware and software were satisfactory for our needs, but we had to face up to the fact that, in terms of both quality and quantity, we were definitely bringing up the rear in Europe.

This was particularly true of office and telephone technology, where the situation was disastrous. In one of our fairly large cities, for example, the telephone exchange had been installed in the 1960s. This might not sound so bad, but technologically, it had been plucked straight from the 1920s. This was by no means extraordinary. I would say it was a fairly widespread state of affairs.

In the course of the last decade, cable TV networks have begun to spread through Hungary. Satellite dishes were available before the 1990, but might as well have been as expensive as the space programme for your average Hungarian. This new technology, however, made it possible for viewers to tune into something other than the stodgy fare offered by the public broadcasting service, which consisted mainly of the spokespersons of whichever government happened to be in power at the time spouting the latest propaganda.

In spite of the difficult economic situation - which continues to deteriorate for ordinary Hungarians - we have witnessed rapid developments in the IT sector. The reasons for this should be sought inter alia in the regulatory complexity within the Hungarian economy, as well as the relatively high cost of properly trained and qualified office staff. As a result, more and more companies, which have now joined the ranks of cost-sensitive, truly capitalist firms, have begun investing in IT.

These investments have encompased the experts formerly employed in state enterprises. These experts have made full use of their skills, experience and expertise to become valuable members of staff in the new capitalist companies. The price of IT has also gone down: the previous custom-made software developments that called for massive investments have been replaced by mass-produced, but subsequently personalised, software programmes.

Several telephone companies have sprung up on the Hungarian market, exploiting the huge structural deficit. At the present juncture and with the exception of a few small towns and villages, the average Hungarian has several choices for telephone service.

The Internet, close relative of the telephone network, is relatively well developed. According to some estimates, 200 to 300,000 people surf the web either at home or at work on a more or less regular basis. This figure represents two to three percent of the population; however, we should add to that figure university students and the majority of pupils at secondary schools who have access to Internet facilities at their educational establishments.

One of the biggest obstacles to the further spread of Internet use in Hungary is not technology, actually, but language teaching, which lags far behind the requirements of the end of the 20th century. Given that English is the lingua franca of the web, surfers who master only Hungarian must cope with a major disadvantage.

IT in Hungary today

Rather than bombarding you with tedious statistics, I would prefer to give you a subjectively tinged, though tangible sketch of the current situation in Hungary.

With the collapse of Communism, Hungary shifted from the top of the league in division two to the bottom of the league in division one. This left us with a bitter taste in our mouths initially, but we gradually managed to pull ourselves together, catching up slowly but surely.

If one were to look purely at percentages and bar charts, one would have to admit that Hungarians are worse off right across the board in the IT sector than the average Western country. Our current position is like that of the local football club that has fought its way up through the lower divisions and has now set its sights on the premier league.

Hungary is particularly well equipped in the field of writing software; for quite some time now, hundreds of Hungarian experts have been working abroad, where they have been steeped in a radically different and more developed working environment and culture. There they have been given exposure to the latest methods and technology in the field of computer science. This has enabled them to accumulate a stock of know-how capital which they can invest in IT in Hungary and which will pay dividends there.

Looking toward the future, one can say that the old Communist government did take one wise decision. Thanks to early computer literacy campaigns at schools in the 1980s there is a pool of young employees who have at least rudimentary IT knowledge. They acquired this knowledge at an age when they were most open and receptive to it, and they are now not afraid of the challenges posed by IT in the modern age.

Hopefully this trend will not only continue but also be strengthened in the future. If so, we can look forward to a 21st century in which Hungary takes its proper place amongst the advanced information societies of the world.

"Blade Runner", 17 July 1999.

Translated by Gusztav Kosztolanyi


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