Russia’s largest network MTS stopped selling Apple’s iPhones in its stores at the end of 2012 and has strengthened its relationship with other device makers, including Microsoft and Nokia, and agreed to promote Windows Phones and opened Windows Phone zones in its flagship stores.
Now Windows Phone is poised to overtake the iPhone in market share, rising from 5.1% last year to 8.2%, according to the IDC, while Apple dropped from 9% to 8.3%.
“Apple wants operators to pay them huge money, subsidizing iPhones and their promotion in Russia,” OAO Mobile TeleSystems’s Chief Executive Officer Andrei Dubovskov said in an interview in St. Petersburg. “Now it’s not beneficial for us. It’s good we stopped selling the iPhone as these sales would’ve brought us a negative margin.”
“When a handset producer is ready for co-promotion and offering special conditions to our customers, its share in our sales increase,” Dubovskov said. “As a result of such co-operation, sales of Windows Phone and Android devices in our retail chain grow faster than in the Russian market in general.”
“The MTS (MTSS) bet on Windows Phone and its decision not to sell iPhones is clearly contributing to this trend,” said Simon Baker, a Moscow-based handset analyst at IDC. The historical strength of Espoo, Finland-based Nokia’s brand in Russia also helped, he said.
The market share of Windows smartphone sales in MTS’s retail network is “probably two times higher than its share in Russia in general,” Dubovskov said, declining to disclose precise numbers.
“Those MTS users who need the iPhone are buying it one way or another — in a grey market or from independent retailers — and are still generating data revenue for us,” Dubovskov said.
Around 315,000 Windows Phones were sold in Russia Q1 2013.
Globally in Q1 2013, Windows Phone had 3.3 percent market share among smartphones in the quarter, compared with 17.3 percent for Apple’s iPhone. In many regions however Windows Phone is now outselling the iPhone, and the trend appears to be for the number of regions to increase, as Windows Phone sales rise and the iPhone is increasingly challenged by the commoditization of the smartphone.