|All three major Russian phone carriers have stopped selling the iPhone at their stores, leaving people to buy from Apple directly, Svyaznoy outlets, or else the black/gray market, says Fortune. The last holdout was VimpleCom, whose Beeline brand severed its ties with Apple last week, replacing the iPhone 5 in its lineup with the Samsung Galaxy S4. Beeline blames the switch on "draconian [Apple] contracts" and "harsh conditions...especially in the marketing department." Previously, MTS CEO Andrei Dubovskov stated that "Apple wants operators to pay them huge money subsidizing iPhones and their promotion in Russia" when asked about his own company dropping the hardware.
Other factors may also be at play. Russia's Roskomnadzor agency doesn't allow phone subsidies, which typically drop the customer costs for devices, but with the tradeoff of locking people into multi-year contracts. Russian import duties and taxes are also extremely high, such that an unlocked iPhone 5 costs the equivalent of $918 in the country versus the $649 it is in the US. Apple has blamed $140 of that on Russia's VAT, and $129 on combined exchange, import, and channel expenses.
The situation is said to be giving an advantage not just to Android devices, but also Microsoft's Windows Phone. Last quarter Windows grew to 8.2 percent of the Russian smartphone market, up from 5.1 percent during Q2 2012. In the same time span, Apple slipped from 9 percent to 8.3.