Russian Mobile Market Players in Troubles over Unsold iPhones

I am sometimes asked by my friends about how the situation with the famous Apple iPhone is in Russia – how popular it is, how many phones have been sold, etc. Unfortunately I have never had any really good things to share with them as while some people here want to have an iPhone (and a smaller number actually own the gadget), the vast majority of the population simply can’t afford it.

The problem is that here in Russia the phones can be sold without any contract by three major mobile carriers. Under the agreement with Apple, these three carriers are obliged to sell a total of 3.5 million iPhones over the period of two years but during the first 6 months after Apple’s phone became officially available in Russia the three of them only managed to sell 250 thousand devices so it is quite obvious that this ambitious number will not be met.

There were numerous reasons for this disaster, the most important one of them being the price. Initially last fall iPhone was introduced here priced at over $1,000 and even now it is still sold for an amount in the range of $700-800. This is definitely not a price that makes it an affordable phone at all. Also as many as 400 thousand devices are reported to have reached the country illegally even before they became officially available here so many of the people who wanted an iPhone already had one so this must have damaged the sales additionally.

At that it is interesting that such poor sales happen amidst heavy advertising support for the iPhone coming from all the three carriers. So it is no wonder that this year the three carriers are not buying and importing any more iPhones and are now negotiating changes in the contract with Apple not to buy the devices they will not be able to sell in Russia.

Time will tell what these negotiations will result in and the results will probably determine the future of iPhone 3GS in the country as well. But right now some of the players in the mobile market here in Russia happened to get into even more significant problems than simply staying with plenty of unsold Apple gadgets. The thing is that the carriers who signed the deal with Apple agreed with a number of retailers for them to sell iPhones on their behalf additionally – as here people tend to buy phones from retailers without contracts (because contracts are very uncommon here at all) than they are to buy from carriers’ outlets.

Now one of such retailers (the large Euroset) will pay as much as $8.5 million dollars to the carrier they had an agreement with (MTS) for the unsold phones. Of course it is obvious that the retailer is now more than willing to return the unsold devices instead of paying the huge amount but their ex-partner will hardly want to get the iPhones back at all as they must realize chances of selling the phones are very low.

To me this looks like yet another example of how different the Russian market is and how difficult it is to achieve success for foreign players – even if they find local partners. But the worst part is that this disaster will hardly teach Apple anything and I’ll expect seeing ridiculously priced iPhone 3GS here as well – way after everyone who wants to have the latest model manages to buy it abroad.

Via CNews (in Russian), image – Russian exclusive SimaPhone by Denis Simachev