The iPhone's incredible run in Russia is stalling. Blame economic sanctions.
After doubling iPhone sales in Russia last year, Apple's share of smartphone units sold there last quarter declined about a third of a percentage point, according to researcher IDC. Meanwhile, the iPad has dropped to No. 4 in Russia, behind Lenovo, Asus and Samsung Electronics, IDC says.
Apple's slowdown has to do with sanctions that the U.S. and Europe imposed on Russia this year for interference in Ukraine. But this isn't a case of Russian patriotism, nor is President Vladimir Putin banning iPhones. (On the contrary, many of Putin's subordinates, including Prime Minister Dmitry Medvedev, are big fans of Apple gadgets, while Russian companies supply gold and rare-earth metals for production.) What actually happened was the sanctions hurt Russia's economy and eroded the value of its currency versus the U.S. dollar and euro.
Local consumers are now less confident about the future and are going for cheaper products. Tablet sales declined because of a challenging macroeconomic environment in Russia, and high-end consumer-electronics brands were hit hardest, says IDC. Apple wasn't alone. Samsung's smartphone sales dropped by more than half last quarter compared with the previous one, according to IDC data.
Russia's bad fortunes proved to be good news for budget brands, particularly Lenovo Group. The Chinese electronics giant increased its share of the Russian smartphone market to 8.6 percent, and became country's most popular tablet brand last quarter, according to IDC. Lenovo accounted for 14 percent of Russian tablet shipments in the second quarter, while shares of Samsung and Apple were halved. Apple and Samsung didn't immediately have comment.
"Russians pay more attention to price and technical characteristics rather than the brand," says Gleb Mishin, a Lenovo vice president in Russia. "I don’t know any other customers who care what type of processor is installed in their phone."
Lenovo sells smartphones in Russia, China and other emerging markets under the corporate parent's brand, but it plans to use the Motorola name, which it acquired from Google this year, in the U.S. and Western Europe. Other no-name electronics brands saw similar results in Russia last quarter. China's TCL gained market share, as did Fly, a bargain-basement Android phone maker that's climbed to first place in Russia. Even Microsoft-owned Nokia got some good news in Russia, where it's nipping at Apple's heels as it vies for the No. 3 spot.