Apple Deals: Operators Won't Bite
A third mobile operator in Russia has ended its contract with consumer electronics manufacturer Apple for its popular iPhone devices. VimpelCom is the latest player to cancel its deal with Apple over the devices company's refusal to soften the terms of the distribution deal. MTS and MegaFon have previously ended their deals with Apple. Despite the popularity of the device BMI believes that the operators have made a smart move given that the majority of iPhones in Russia are likely to have been acquired on the grey market.
The iPhone continues to be an aspirational item for many consumers. However, the device carries a high price tag that prevents lower income mobile subscribers from acquiring one. This has been particularly challenging for operators in Russia, where handset subsidies are banned, preventing the operators from making the devices more attractive with a long term view of generating greater revenues from the expected high data usage from iPhone owners. Local website Mobile Review claims that Apple holds around 4-5% of the Russian smartphone market, with around half of the devices acquired believed to have been purchased on the grey market.
Apple's global smartphone market share is closer to 25%, highlighting the difficulties it has had in reaching Russian consumers. This will not be helped by the refusal of the market's three largest mobile operators to sell the devices. While details of the operators' contract terms with Apple have not been publicised, Apple has been strict with the majority of its network partners, requiring handset sales targets over the duration of the contract as well as shared marketing costs. From the launch of the very first iPhone, Apple has kept firm control of partnerships with network operators, reaching contractual agreements over subsidies and sales volumes, reports the Financial Times. In the European Union, this has led to an investigation led by the European Commission.
|Apple Has Small Share Of Growing Pie|
|Russia Mobile Device Sales|