Russia left without Apple’s merits of civilization

The Russian market of smartphones is going to remain without the famous iPhone. The "Big Three" of Russian mobile operators - MTS, VympelCom and Megaphone - did not renew contracts with Apple Inc. for the supply of "smart phones" because of the lack of demand on them. Why couldn't the widely advertised and acclaimed iPhone find its place in Russia?

The reason is simple - the high cost. Because of its price, Apple smartphones can not compete on the Russian market either with other companies or with the iPhones sold by "gray" importers. Apple made a condition, according to which iPhone smartphones should be sold on the Russian market at a price of 30 thousand rubles ($1,000). Needless to say that paying such a high price for a phone (even if extremely useful and functional) is unlikely in plans for the majority of Russians. If looking at the problem in national scale, buying an iPhone without sacrificing the family budget is affordable for only a small layer of well-to-do people, who, most likely, live in the vicinity of the federal center. 

"If I am not mistaken, Apple products take eight percent of the smartphone market in Russia. The suspension of deliveries of iPhones will not show a considerable influence on the Russian market. Eight percent is a minor segment of the market. Android takes a much bigger share - 70 percent. Moreover, there is a high effective demand on Apple products, that is, if a direct supplies contract is not concluded, the demand will decline slightly because there is effective demand on what Apple makes, and a slight increase in prices will not affect it," Timur Nigmatullin, an expert with Investcafe said.

However, iPhone can hardly be called a product for the privileged society. Despite the fact that since 2008, Apple was marketing its smartphones in Russia only through three largest mobile operators (MTS, VympelCom and Megaphone), many iPhones found themselves on the Russian market with the help of "gray" importers. Any Russian citizen that has a desire to own an iPhone and nothing else on Earth can always buy a "gray" iPhone at a much lower price.

Meanwhile, the Russian mobile operators, that were obliged to purchase 1-1.5 million Apple smartphones in two years, were left with nothing. The iPhones that  the operators bought could not be sold - the demand was much lower than the supplies. When it was time to renew the contract with Apple, the participants of the "Big Three" club refused. Moreover, Apple is not going to mitigate supply conditions.

However, according to the Vedomosti newspaper, Apple has already started negotiations on direct supplies of iPhones with Russian electronics retailers. To date, there is already a player on the market, where the Russians will be able to purchase Apple smartphones at their official price - Svyaznoy trading network. 

"Worldwide, Apple smartphones are sold by mobile operators, but Russia is a special case. Russia has an open market, a distribution one, we do not have the market of cellular operators. Apple crossed a hedgehog with a snake a few years ago: the corporation reached an agreement with Russian operators that was lucrative only for the American company. The Russian companies were obliged to sell the iPhone in Russia on an exclusive basis. Elsewhere, operators subsidize phones and smartphones, and offer them to customers at affordable low prices complete with contracts. In Russia, such a scheme is impossible for a number of reasons. The Russian operators were simply selling iPhones in their shops and wholesale channels at around 30,000 rubles ($1,000) - the price that was recommended by Apple," commercial director of Vobis Computer, Mikhail Chernyshev told The smartphones would be sold poorly, the operators failed to fulfill obligations to Apple and, reportedly, received severe penalties. And now, when the contracts expired, the Russian "big three" didn't want to renew them. Apple went to Russian retailers - in my opinion, Apple should have done that a few years ago, instead of working with the operators," the expert concluded.

Marina Rozhkova, an independent analyst of the market of mobile gadgets, shares a similar opinion. "Russia is an open market, and it is retailers, who run the show of selling phones in the country, not the operators. Moreover, the domestic operators, as far as I know, were not too pleased to be working with Apple - they played the role of distributors, rather than the operators that sell iPhones with their contracts all over the world. They have not profited much from the status of official iPhone sellers," the expert concluded.

According to unconfirmed information, shipments of Apple iPhone will resume to the domestic market in the fall of 2013. In the meantime, Russian fans of the US-based company can purchase legendary smartphones, as well as other products, such as iPods, iPads and Mac computers on the recently opened Russian-language Apple Online Store.

Elizaveta Polskaya.

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Author`s name Dmitry Sudakov