Huge expectation that Russia would prove an incredibly lucrative market for Apple’s iPhone have been dashed. Gloomy reports claim Apple’s three carriers there are unable to meet sales quotas, and are receiving a steely response from Cupertino to their requests for subsidies, lower prices or some kind of carrot to win over Russian consumer hearts and minds.
A report reveals Russia’s three major mobile carriers reached a deal with Apple last year that demanded they sell 3.5 million iPhones over two to three years…but only 250,000 units shifted in the six months following the product’s introduction into Russia.
Worse, one of the big Russian retailers currently owes one carrier $8.5 million for iPhones it just can’t shift.
Expectation was high for the Russian market. The trade in grey market iPhones was extremely brisk there, with an estimated 400,000 jailbroken ‘phones already in circulation before Apple’s “official” launch. This apparently sated some demand among Russia’s small but rich middle classes.
What’s in the way of sales? Price, of course. With an estimated 15.8 per cent of the 140 million-strong Russian population living under the poverty line and an average per capita GDP of $15,800, the $1,000 Apple originally wanted to charge was just too high for the product to get the street appeal its managed to create in other countries. Also, the price of oil has adversely affected Russia’s economy.
Also in the way is the carriers. This lesson’s coming through loud and clear across all iPhone territories – consumers seemingly like to pick up their choice of device on their choice of carrier, rather than being stuck using devices they may like with carriers they don’t like.
Carriers have now stopped buying iPhones from Apple and are trying to renegotiate prices and or quotas, but Apple’s not ceding to these demands, Fortune informs.
“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,” one Russian commentator observes.