Apple Scores Victory with Russian Wireless Carriers Over iPhone

By Tracey E. Schelmetic February 20, 2014

While many of us have been watching the Winter Olympic Games in Sochi, Russia for the past two weeks, there’s one thing we haven’t seen much of: iPhones being used by ordinary Russians. There’s a pretty good reason for this, and it involves an ongoing squabble that Apple has been having with major Russian mobile phone service providers.

The analyst group IDC found that iPhone sales in Russia doubled last year to 1.57 million. While this may seem like a lot, consider that the population of the Russian Federal is about 143.6 million. Part of the reason for this low penetration is that as of the middle of last year, none of Russia's top three wireless carriers were selling iPhones, according to a recent article by Bloomberg. The lack of iPhone choices are due to Russian law and Apple business policies not rubbing well together.

“Apple wanted carriers in Russia to cover the costs of subsidizing and promoting the iPhone, like they do in the U.S. and other developed markets,” wrote Ilya Khrennikov for Bloomberg. “However, Russia has laws preventing phone companies from discounting devices in exchange for longer contracts. Wireless operators in the country deemed Apple's terms, which included minimum sales requirements, to be too onerous.”

The majority of the 1.5 million iPhones sold in the country last year were the result of Apple doing a tricky end-run around the phone carriers: they sold iPhones directly through Russia’s largest electronics chain, Svyaznoy. The carriers, who are beginning to see missed opportunities, are now relenting. MegaFon, Mobile TeleSystems and VimpelCom all began selling iPhone last fall. This is clearly good news for Apple, as market penetration of smartphones in Russia is still below 50 percent. This, coupled with the fact that Russians have good discretionary spending power, means the nation is a rich, green field for Apple, which currently owns only eight percent of the Russian smartphone market.

Apple does have a hurdle to overcome, and that’s talking Russians into spending more on its expensive iPhone 5C and 5S models, especially since Russian law prohibits carriers from discounting the phones. (Americans signing a wireless phone contract with a provider can purchase iPhone 5s for as little as $100). Most Russian iPhone sales to date have been for cheaper iPhone 4S, which is priced around $500. The iPhone 5 models, which will set Russians back nearly $1,000, may be a tougher sell. 




Edited by Cassandra Tucker

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Windows 10 Free Upgrade Ends This Week: Rethinking Microsoft's OS

By: Rob Enderle    7/26/2016

At the end of the week the free upgrade window for Windows 10 closes. This has been an interesting experience because Windows 10 for the most part ste…

Read More

Ericsson CEO Leaves the Company

By: Paula Bernier    7/26/2016

The move from hardware- to software-based networking solutions, along with the fact that our still recovering economy has kept many businesses cautiou…

Read More

3D Printing Helps Unlock Phone's Secrets

By: Alicia Young    7/25/2016

Recently, the police's ability to access someone's phone has been a hot topic in American news. I'm sure we all remember the ordeal involving Apple an…

Read More

Verizon Snaps Up Yahoo: A Yahoo! Or Yah Boo!

By: Peter Bernstein    7/25/2016

The sale of Yahoo's core assets to Verizon for a reported $4.83 billion, leaving Yahoo shareholders with roughly a $41 billion investment in Chinese I…

Read More

Four Most In-Demand Programming Languages and Frameworks For Wearables

By: Drew Hendricks    7/25/2016

It's no secret that development and programming are very highly sought-after skills these days. Various tech jobs are consistently among the highest p…

Read More