High Prices and Corruption Make iPhone a Bust in Russia
10:22 am, July 30th, 2009, Lonnie Lazar
The iPhone has been an utter disaster in Russia, according to an interesting report penned Thursday by Svetlana Gladkova at Profy.
The Russian experience suggests that, despite howls of complaint by some consumers in markets where Apple has exclusive distribution agreements with a single or perhaps a pair of wireless carriers, where the device is sold unlocked and unsubsidized by carriers, its price simply puts it beyond the means of all but a tiny number in the current global economy.
Three major carriers sell the iPhone in Russia, having collectively agreed with Apple to sell 3.5 million units over a two year period. But they have managed to move barely 250 thousand phones in the first six months of availability, according to Gladkova, and market players there a feeling distinctly glum about prospects for meeting their goal.
Unlocked phones in Russia — where service contracts are not nearly so common as in markets such as the US and UK — sold initially for the dollar equivalent of $1000, though the market price has dipped currently to $700 – $800, which is still hardly affordable to a populace with per capita GDP of around $15,000.
Corruption also hampers legitimate iPhone sales in Russia, where some 400,000 black market devices made it into circulation before the official release, according to Gladkova, soaking up early demand and deflating the impact of continued heavy advertising by the country’s three service providers.
Now, carriers and their retail partners — local distributors on the hook for millions of dollars in ancillary distribution agreements — are playing hot potato with millions of unsold phones while the carriers scramble to rewrite their contracts with Apple.
The chaos in the Russian market makes things here in the West seem downright orderly, where, ironically, an 8GB iPhone 3G can be had for under $100.
Image – Russian exclusive SimaPhone by Denis Simachev
Posted by Lonnie Lazar in News, iPhone | Comment on this article
It’s the same in Brazil, but no one says anything.
Here, an iPhone, without long term contract, is around 1300 dolars. to pay 400 dollars, we need to sign a long term contract on the value of 150 dollars a month, that gives us nothing but just 100 minutes and 50 SMS, plus 1gb of data traffic.
Mauricio Paes Ruiz, on July 30th, 2009 at 12:31 pm
I definitely wouldn’t spend that much on iPhone. Or any other phone for that matter.
Nthn, on July 30th, 2009 at 1:03 pm
Thus proving that the Ruskies are a lot more frugal and less gullable than us Westeners!!!
Don’t get me wrong, I love my 3GS, I resent being tied to a contract that is only of use to my purposes for the internet/data roaming in my home country (uk)…..maybe I’m unusual that I don’t want to use 600 minutes and 600 texts per month……and as much as I’m an Apple lover…having to pay £560 for a device that is more expensive than a bottom range laptop does hurt (My original 3G was stolen …thus)
I love checking my emails every hour
I love checking to see if i have any Facebooks comments every hour
I love taking low grade photo’s and sending them to my non existant friends……..
Apple have taken science fiction and helped us want to be part of the future now……lets hope Aplle can design the future now and not rip us off
A-Dam, on July 30th, 2009 at 2:53 pm
@A-Dam,
Really, Did you read the same article as I have? “Re-Read it Again”
This has NOTHING to do about the so called “frugal Ruskies” as you put it.
It has everything to do with all the corruption and illegal control of the Top Leaders in Russia.
If you ever have Been to Russia, You would know first hand that Most of the Political and sociological control of Products and economics for “Russia” is controlled be organized crime, This is the Problem they have had ha Many Many Many…years, It has changed hands so many times that each “CELL” of organized crime want’s there cut and so go UP the Prices.
It Has “NOTHING” to Do with The Frugal RUSSIANS, It has everything to do with who can get as much as they can for each organized Cell in Russia. And then in turn cost are up and not affordable to only the elite.
Go to Russia some time, You will see it first hand, from everything to food, clothes, to Liquor. Certain Control of these Cells are completely destroying them more so then what the cold war did back in the day.
And electronics of ANY KIND has Many hands that get there cut if you want to Sell Products in Russia.
Note: “Ruskie” is a 70’s Slang term that is not used today and very slanderous to allot of good Russian Folks that are honest. As with Most Governments, Russia is Most known for Control by Organized crime, But this has nothing to do with the People that have no choice to put up with it or face the consequences.
But then again greed has many faces, i see it every Day. So much for the Human race & Progress,
With Money and power the driving factor of control, Man turns back into the uncivilized animals the are.
Katy, on July 30th, 2009 at 6:36 pm
700-800 dollars is what everyone pays for an iphone, it is just that in most countries the cost is spread out over the contract period. A 32GB iphone without the contract will cost you over a grand easy. It is the same with the contract of course, but people simply forget because it is not up front.
bas, on July 31st, 2009 at 12:49 am
I think this article sucks: apart from being uninformative it does not really has anything! If you can’t afford the smart Phone – don’t buy it! Simple
Alex, on July 31st, 2009 at 6:20 am
Thankyou Katy…my “Glib” comment was not mean’t to insult anyone and if it enraged you then I only apologise.
The majority of my comment was relevant to a genral populace internationally and I did not intend to distract from that with my first comment
Although I would like to continue this conversation, i do feell that every word I write is likely to be analysed, interperated and misinterperated, one fo the dangers of the internet and obviously living in Russia for too long!!
A-Dam, on July 31st, 2009 at 8:16 am