John Paczkowski

Recent Posts by John Paczkowski

In Russia, iPhone Buys You

It’s not entirely clear what happened, but Russia’s wireless providers appear to have overcome their distaste for iPhone carrier agreements they had previously considered unacceptable. In the past week, two of the country’s major cellular carriers have signed distribution deals that will bring the iPhone 3G to Russia. VimpelCom Group was the first. And now MegaFon says it will begin selling the device in Russia later this year.

The deals are something of a turnabout for the Russian carriers, who had initially balked at the terms of Apple’s (AAPL) iPhone distribution deals, which reportedly required local carriers to buy phones wholesale and pay Apple 10 percent for each device sold, as well as 10 percent from each subscriber’s monthly fee. Whether Apple adjusted its terms to woo Russia’s reluctant carriers or the carriers simply rolled over is anyone’s guess. But one thing’s certain, the iPhone’s popularity in Russia’s so-called gray market suggests strong sales of the device following its official debut. Indeed, analysts predict sales of the handset in Russia could reach 700,000 in 2008 alone. “Typically, Russian operators are not strong handset sellers, and users prefer to buy handsets separately from their mobile contracts,” said Konstantin Belov, a telecom analyst at UralSib. “But the iPhone is very popular, and if mobile operators start subsidizing it, they will probably see strong demand.”