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Low iPhone sales threaten Russian carriers

updated 03:30 pm EDT, Thu May 21, 2009

Low Russian iPhone sales

Extremely low Russian iPhone sales may threaten the country's three biggest cellphone carriers, several regional reports suggest. MTS, Megafon and Vimpelkom all agreed to carry the iPhone in 2008, with the provision that each would sell a minimum quantity. MTS agreed to sell 1 million phones in three years, while Megafon agreed to the same amount in two years. Vimpelkom made the most dramatic pledge, hoping to sell at least 1.5 million phones in two years.

The problem is that while approximately 900,000 iPhones are now present in Russia, only 400,000 of these were delivered through Apple partners, the rest having been imported and hacked to work locally. Of the official iPhones, just 127,000 have allegedly been sold to the public, leaving vast numbers remaining in stock. No Russian carrier has ordered more iPhones from Apple during 2009, research is said to have uncovered.

Should iPhone sales not pick up dramatically over the course of the next 18 months, the carriers could thus be left in breach of contract, collectively owing between $500 million and $1 billion. The exact fines may be dependent on factors like retail prices; sources claim that two of the carriers have already told shareholders to prepare, though negotiations could defray costs. The companies are believed to be asking for either lower prices or smaller quotas, both of which Apple has refused.




by MacNN Staff

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Comments

  1. Jonathan-Tanya

    Joined: Dec 1969

    -4

    fictional number

    Even though you may delight in giving fictional numbers for 'hacked' iPhones in Russia. even if your numbers are correct, your own math shows its irrelevent, even sales of 627,000 (your 500,000 'hack' made-up number, plus the 127,000 actually sold = 627,000) is extremly low, and wouldn't have met the commitments the carriers made.

    MEANING the real story is about low iPhone sales in Russia, and the 'hacking' just your prejudice about Russia, and inconsequential to the story.

    Not that Russia doesn't have it shared of legally imported and properly used iPhone, not sold through Apple partners....but even if you could wave a magic wand and disappear this market, that wouldn't translate into much in the way of more iphone sales through apple partners, but simply more sales of phones to other brands, not apple.

    Because, what it comes down to is this, the economy crashed, and people don't have money to pay for one of the most expensive phones in all of Russia.

    Try not to make every story about your own prejudices, and try reporting some facts and doing real analysis.

  1. climacs

    Joined: Dec 1969

    0

    anti-Russian bias?

    wow, who knew that MacNN was part of the worldwide conspiracy to keep Mother Russia down? Thanks for exposing the conspiracy, Jonathan-Tanya.

    Tinfoil hats, ACTIVATE!

  1. testudo

    Joined: Dec 1969

    -2

    don't buy it

    There's no way all three of those cell carriers pledged to sell so many iPhones and fork over big bucks if they didn't. No one can be that stupid, no matter how popular the iPhone is.

    And even if it were all true, they'll come up with some good business tactics (like sell the mobile contracts to a subsidary and then run those into bankruptcy).

  1. Gazoobee

    Joined: Dec 1969

    -1

    dumb comments

    first @ testudo: You are wrong. That's exactly how the contractual arrangements with carriers are done.

    second @ climacs: WTF? joke?

    third @ Jonathan-Tanya: The commitments are for 3.5 million phones over a two year (or so) period. This means the 627,000 for this year, is not really that far off. They would miss the commitments by about 20% or so. The fact that they can't meet the commitments can be attributed to the price and the recession as you say, but none of that has any bearing at all on the 500,000 grey market phones.

    It also ignores the fact that the grey market phones obviously contribute to the failure in a rather large way. This year, they are missing the commitment by a number that's definitely smaller than the number of grey market phones.

    If the number of grey market phones remains the same over the next year or two then the effect is small, but if there are another 500,000 grey market phones next year then the numbers would again be greater than the difference between the commitment and the sales.

    500,000 (if true) is an absolutely huge number relative total sales of the device. There is no way that this has no effect on the profitability of the carriers and seems in fact to be the deciding factor just as the article suggests.


  1. Jonathan-Tanya

    Joined: Dec 1969

    0

    wrong

    @climacs it requires no conspiracy to be ignorant.

    @gazoobee. No, you are linking grey market iPhones with sales of iPhones from the other carriers, but based on what? You have interviewed 500,000 Russians and you know they were in the market for an iPhone, and had it not been for the grey market, they would have purchased from a carrier on a one to one basis.

    The fact is, the impact is quite minimal. The people in the market for pay-as-you go is huge, in that country, and the market for subscriptions, low.

    The market for subscription iPhone sales is what it is....quite low. Apple can take advantage of additional sales (hardware only, no subscription), or not. Frankly they'd rather not, and its their choice to limit their sales by not fully supporting the whole market...

    There are a lot of people uninterested in subscription plans and grey market phone both....thats the missing market for apple right now.

  1. Jonathan-Tanya

    Joined: Dec 1969

    -3

    Ukrainian factor

    Now, I don't want to bore anyone with ethnic squabble in some far off land, but the fact is, in Russia, there are a lot of migrant workers, from central asian countries but especially from Ukraine.

    These guys, they just don't see the need to buy an iPhone from a licensed apple partner...so they are bringing their unlocked iPhones into the country. There, I said it, its out in the open now.

    Well you know, frankly I don't want to sound racist, but its a well known fact, that some people lack the buy-from-Apple-only gene, and well...some peoples lack this gene, more often than other peoples...and frankly, I can sympathize with these Ukrainians, I personally would starve before missing an iPhone subscription payment, but some of these ppl like to eat, and they are actually buying potato's instead of paying for an iPhone subscription.

    Shame, shame...terrible thing, terrible....we need to crack down, do something about it.

  1. Jonathan-Tanya

    Joined: Dec 1969

    -3

    if only if only

    if only we would crack down, think about it, the wealth would magically appear to pay for iPhone subscriptions.

    Its a well known fact that smacking ppl in the head creates wealth spontaneously.

    Please...please, if you really think about it, I mean put some logic to it, we would actually be doing these Russians a favor, if only we would crack down in some way, a bit harder.

  1. LeoNobilis

    Joined: Dec 1969

    -4

    3rd World Countries

    Come on, Apple products do not belong in 3rd World Countries! China, Korea, ex-Soviets, the whole of Africa's political contingent [and so on] civilisation has nothing to invest in those who've never given a thing to civilisation.

    Speaking strictly of technology, there are fanufacturers whose products fit much better with the population of the 3rd World than Apple's.

    cordially,
    Art Khachatrian

  1. Jonathan-Tanya

    Joined: Dec 1969

    +2

    dunno

    I don't know, Art, about civilisation, but who was first to put a person in space?

    That ex-soviet country Russia sure seems to be awful proud of some guy but the name of Yuri Gagarin...I know everyone knows it was really John Glenn, but they have bad history books over there.

    Ya, technology, technology is good.

  1. vincas Giedraitis

    Joined: Dec 1969

    +2

    @ art

    art, i presume you are being very sarcastic. first of all, china, 'korea,' and ex-soviet countries were never 3 world countries in the first place (first/second/third world country distinctions disappeared with the fall of the ussr). secondly, i presume you've heard of skype - it was developed by programmers in estonia. thirdly, your comment that africa has never contributed anything to 'civilization' is absurd. read about someone named ibn khaldun.

    again, i presume you were just being sarcastic in your comment...

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