Original URL: http://www.theregister.co.uk/2013/07/17/russia_says_nyet_to_apple/

Russian mobile operators say 'nyet!' to Apple, 'da!' to Samsung

All three top carriers have discontinued iPhone

By Neil McAllister

Posted in Phones, 17th July 2013 21:23 GMT

VimpelCom, the last of the "Big Three" Russian mobile carriers to stock the iPhone in its stores, has reportedly discontinued the device, leaving all of Russia with just one retail supplier for Cupertinian kit.

Russia is one of the world's largest mobile markets, with over 230 million mobile subscribers, according to research firm GSMA Intelligence. The country's three largest mobile carriers – MTS, MegaFon, and VimpelCom under its Beeline brand – together account for around 80 per cent of the market.

All three signed on to offer their customers the iPhone in 2008, but their enthusiasm has since waned. MegaFon stopped selling fruity phones in 2010 and MTS failed to renew its contract with Apple with the release of the iPhone 5 in 2012.

Now Russian tech news site Hi-Tech.Mail.Ru reports that VimpelCom has also ended its dealings with Apple. According to the site's chief analyst, Dmitry Ryabinin, "Apple's conditions are hard, especially in terms of marketing, and not always profitable for partners, so VimpelCom's decision is logical."

Andrei Dubovskov, CEO of leading Russian carrier MTS, elaborated in an interview last week. "Apple wants operators to pay them huge money, subsidizing iPhones and their promotion in Russia," Dubovskov told Bloomberg. "Now it's not beneficial for us. It's good we stopped selling the iPhone as these sales would've brought us a negative margin."

Not to mention, Apple launched its own online store in Russia on June 26, putting even more pressure on the carriers. Apple can offer its products at the same time that they appear in other regions, while Russian retailers and carriers have often had to wait.

Cupertino has been upping its efforts to sell direct to consumers of late. At a recent meeting, Apple CEO Tim Cook reportedly expressed dismay that 80 per cent of all iPhones are sold through carrier stores, rather than Apple Retail Stores, and suggested that he'd like to see that figure drop to 50 per cent.

But there are no Apple Retail Stores in Russia. VimpelCom's decision to end its contract with Apple leaves Russians with only one Apple-authorized bricks-and-mortar iPhone reseller, the retail chain The Messenger, and most Russians buy their phones through carriers.

Other than Apple's online store, the rest of Russia's trade in Apple kit is through the black market, where iPhones can command astronomical prices. Not that legally purchased iPhones come cheap, mind you – Apple's website offers the iPhone 5 starting at 29,990 rubles ($925/£608).

Switching sides in the smartphone wars

VimpelCom reportedly has already signed on with another mobe-maker to replace Apple in its stores. That would be Cupertino's hated rival, South Korean smartphone juggernaut Samsung, which reportedly is offering the Russian carriers much more favorable terms than Apple's.

According to Hi-Tech.Mail.Ru, VimpelCom's new partnership with Samsung will allow the carrier to purchase any of Samsung's products direct from the manufacturer and market them in its stores across Russia, in addition to being able to offer exclusive deals to its customers.

The deal could prove to be quite a windfall for both VimpelCom and Samsung. The mobile market in Russia is still maturing, and many customers have yet to make the jump from low-cost feature phones to smartphones. Unlike Apple, Samsung makes both kinds of devices.

Meanwhile, the numbers don't look good for Apple. According to the latest figures, iOS devices accounted for just 8.4 per cent of the Russian mobile market in the first quarter of 2013, down from 9.0 per cent in the year-ago quarter. The fact that no major Russian carrier now offers the iPhone can only hasten that slide. ®