1 Aug 2012

[News Update] iPhone Pricing "Dictatorship" to Blame for Emerging Market Struggles

iPhone 4S

MTS' Vice-President of Marketing, Vasyl Latsanych, has strongly criticized Apple for being heavy handed about the iPhone's pricing policies in Russia. MTS is the iPhone's largest carrier in Russia, where the device is priced above $1000.

Here's the full quote from Vasyl Latsanych:
They’re more in a dictatorship mode where they say, ‘This is what you have to do or you don’t get the iPhone’. Being arrogant with your partners in big markets doesn’t pay off.
The quote clearly reveals some tension between Apple and MTS. It is not a stretch to assume that Apple is facing similar issues with other distribution partnerships in emerging markets. The pricing model and response from carriers are probably the key reasons behind the iPhone's market share weakness in emerging market economies. Many countries like Russia, India, etc. do not follow a carrier subsidized model, which means Apple needs to pick a side in the margin vs. volume debate. So far, Apple has picked margins and volumes have suffered as a result.


4 comments:

  1. Price is not the best way to judge an Apple product.

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  2. ....
    Yes, I'm sure that sentiment is helping their market struggles in emerging markets.

    It's comments like this that cement my opinion of just how good Apple truly is at marketing their brand.

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  3. Why the hell he doesn't blame Samsung with its Galaxy S3 price? SGS3 costs same (cent to cent) as iPhone 4S... actually not a $1000, but $925, on MTS web site.

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  4. ..... Probably because Samsung's smartphone models cover a much wider price range than Apple's do. Also, the fact that the S3, a phone released less than two months ago costs less than a phone released almost a year ago shows which company is more flexible.

    And people, this is an executive of a leading carrier. He has no reason to play favorites. He is just expressing business realities which show why the iPhone is struggling in emerging markets.

    AT&T's recent move shows that this sentiment may not be specific to emerging markets either.

    ReplyDelete