VimpelCom joins other major Russian mobile operators ditching Apple and the iPhone

Lumia 925

It has been reported that the top three major Russian mobile operators have ceased selling the iPhone. VimpelCom has closed its partnership with Apple, following MTS and MegaFon. We previously looked at MTS preferring Windows Phone over the iPhone, feeling more comfortable with Microsoft's mobile platform, but this is an issue for Apple on a larger scale. 

So what's going on? According to reports, VimpelCom is the latest partner to go in Russia and has put the move down to "draconian contracts" and rather harsh conditions, which has led the operator to switch over to Android and take up Samsung. This is a huge blow to Apple since the three operators are the largest cannel to market for smartphones in Russia.

Russia isn't quite yet a massive pool of potential revenue for smartphone vendors, but to not have the three top mobile operators backing your mobile hardware isn't quite the stance Apple (or any company in the industry) requires. Enter Windows Phone and competitors.

Steve Ballmer
MTS chooses Microsoft over Apple

As noted above (and in our coverage), MTS is a strong supporter of Windows Phone and Nokia has been pushing low-end, more affordable hardware into the market. This is a strong combination that has resulted in a steady climb for the platform. Windows Phone 8 has proven to be a small hit but there's still a long way to go, but it's the change of winds like what's occurring in Russia that will play a major part in increasing market shares.

It's also worth noting that Russia isn't the only market where partners are looking to cease deals with Apple due to demanding contracts. How Apple will attempt to work around this issue to maintain working relations with retail partners will be interesting to witness, especially as Microsoft continues to work with Nokia to push cheaper smartphones to consumers.

via: Rethink Wireless; thanks, pbroy, for the tip!


Reader comments

VimpelCom joins other major Russian mobile operators ditching Apple and the iPhone


Haha, you forgot about vodka, bears and balalaikas, we got no room for iPhones left here))) but seriously, I can see more and more lumias around here, besides we totally prefer PCs over Macs so WP provides a lot richer experience acting within ecosystem.

They aren't. The cold war is over and they aren't our enemies anymore (something a lot of people don't seem to realize).

There will always be too serious people, never mind. There are still some people here in Russia who believe you've not been to the Moon, it was a total fake and so on...

Heh maybe that's because you're not commies and not ve been forced to think you've been to the moon but have been made to think so via tv, which is much ...em.. smoother? Now my turn to start kidding :-D :-D:-D

Many of us have been saying that for the last year and 1/2.
The two big boys have reached levels that are unsustainable and have nowhere to go but down. AAPL has missed there earnings the last several quarters (I think they did hit on one. This is off top of my head) and Sammy just missed there earnings. AAPL is scheduled to report earnings on 7/22/13. It will be interesting to see what will happen if they miss again.

Disagree. Apple can still grow iOS, but not with excessive margins, locked down OS, and charging ridiculous prices for the iPhone.

They CAN, but history shows that they won't. Apple has always been a walled-garden ecosystem, and they like it that way.
I've said it before, and I'll say it again... by year-end 2015, Apple will be back to the same place they were in the late 1990's... bankrupt, and this time we'll not see Bill Gates and Steve Jobs team up to save them.

"AAPL has missed there earnings the last several quarters"
Wrong, they consistenly beat their guidance, where they've fallen short is with analysts estimates (not at all the same thing). What has happened is that they changed the way they calculate their estimate to be more accurate. Analysts, used to them blowing past their corporate guidance, still haven't fully adjusted to the more accurate guidance.

If UK, US, and China market take a stronger stance this is only a minor setback, but important one nonetheless

In the UK WP is in the double digits now and growing.. As has been said Apple has nowhere to go but down. Since iPhone4 nothing serious has changed and it's just trying to catch up to (mainly) Samsung/Android for iPhone.

In the UK the iPhone is still seen as the desirable phone, the fashionable one to have, particularly with those that have money. I just cant shift some people away from this view and a lot of them have invested in their whole ecosystem. Where I can see WP growing more is in the ex feature phone users and lower price bracket.

Apple might want to change its stance, or it might have another Mac-like situation on its hands. The iPhone could become more of na also-ran (as far as hardware is concerned), but the exorbitant pricing might push people away (this time, the carriers). It might end up like Macs, where they sell more to the high-end crowd, while Android and windows Phone cover the market from top to bottom. It would be rather silly to see Apple care more about a per-device profit, and have the result be a marketshare back in the 10-15% range, like Macs are.

The right place for Apple is its 5/10% of mono-cellular brain users.
Russia is the II market for my Apps, just now, second to USA only.

Only in the U.S. and some other English speaking nations has the Mac got that market share. In most countries the Mac is still very irrelevant.

As "Roosky" I can say that mobile operators here are not major phone sellers. They mostly sell contracts without devices, phones are just side business... There are few very big retail networks who make the "weather".
But VimpelCom's move is definitely good sign for WP in Russia.

This news might be indicative of what is coming to the US eventually.  Apple is terrible to work with.  IF news is correct, Verizon is going to push iPhones hard over the next few months, but I would bet that they won't sign another deal that could break their backs.  

the three operators are the largest cannel to market for smartphones in Russia.

Not true. In Soviet Russia nobody buys phones at carrier's shops.
No one buys subsidized phones.
And no one buys contracts.
At launch of iPhone 3G three operators offers US-like contracts with subsidized iPhones. And it was epic fail. They sell zero of iPhones and Apple was angry.

Posted this over at iMore and thought i'd voice my opinion here too...
I'm not from Russia... but living in a country where the new Android and Windows Phone launch at the same prices as the latest iPhone, only going down with time, and people purchasing the alternatives over the iPhone, I think that speaks highly about the variety of options and the premium hardware out there. Yes, iPhone may be a premium Apple product, but it certainly is no longer "the" premium phone out there. With the likes of Nokia Lumia 925, HTC One, and Samsung Galaxy S4 among others high in demand in a country such as Pakistan even, I think Apple will eventually have to adjust their strategy a bit or they may be in trouble of falling behind in other countries as well.
Hopefully with the release of iOS7 and a new iPhone model later this year, they'll be able to claw their way back up to the top... but that's just something that remains to be seen.

I don’t think they’re actually doing this because they dislike iPhones, that doesn’t really make any sense since it’s a good product.


I believe that there’s some kind of political power lobbying for shrinking the size of American imports.


In the smartphone business, 95% of profits go to the manufacturer of the phone, and the other 5% go to the manufacturer who made the software. (well, that’s a gross oversimplication, but you see what I mean).


If Russian carriers sell iPhones, they’re giving that vast majority of those profits back to the USA. Whereas if they push Windows Phones, they’re giving 95% of the profits to Nokia (aka Finland), and only 5% to Microsoft (aka USA). Since Windows Phone customer satisfaction is second highest only to the iPhone, it’s the best alternative product to push.


Does my analysis sound correct?


TL;DR: Putin hates USA, wants to give them less money, sees smartphones as a big market and an easy way to do exactly that.

I think that the industry in general is watching Verizon very close right now. There is simply no way for VZW to meet their quota, and they are going to get hit hard for it. Other vendors around the world have similar contracts and are quickly realizing that they could easily be stuck in the same situation, so rather than making promices that will hurt them down the road, they would rather just jump ship and do business the way that everyone else does.
As others mentioned, service providers are not huge phone sellers out there, so this is not as large of news as it seems. But just because it is easier to cut ties in Russia does not mean that others will not follow suit.

America is place where this will never happen unfortunately. This is just as good. I hope this awakening spreads.

Когда я устаю пить водку и играть на балалайке, я иду с моим медведем чистить улицу от снега. Шутка. В России смартфоны очень дорогие. Iphone5 на старте продаж в US можно было заказать в Россию за $3000. Я покупал Lumia720 моей жене за $470 у официального продавца. IPhone's стоят на $200-$300 дороже, чем на eBay.

Per your request:
"When I get bored drinking vodka and playing the ukalaily, I go with my bear to clean off the streets of snow. Kidding. In russia, smartphones are very expensive. Iphone 5 at launch in the US could sell for $3000 in russia. I bought a Lumia 720 for my wifre for $470 from an official reseller. Iphones cost up to $200-300 more, on ebay."

Basically he meant that WP is much cheaper than iPhone here, in Russia(on iPhone 5 US start, we had the option to buy it for 3000$(about 100000 rub) from an unofficial reseller and on Lumia 720 start - 470$ from an official retailer).

That is because our contract system works differently from yours. We are paying for a SIM card and later we choose a suitable plan(for example, mine is 500rubles(about 17dollars) per month). If you are buying phone with a contract here it's still unlocked, you just get a new SIM card with your phone and you are free to switch anytime. So, basically all phones here are unlocked.