Handset majors face contrasting fortunes in Russia

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Handset majors face contrasting fortunes in Russia

By CAROLINE GABRIEL

Published: 9 September, 2009

READ MORE: Russia | Handset

Russia is one of the fastest growing mobile markets in the world, and operator MTS is its key player, especially in the nascent mobile web. The carrier announced the first product fruits of its recent alliance with Vodafone this week, unveiling a co-developed webphone as part of its ambitious web strategy. But while Nokia has also staked out a major role in this MTS roadmap, Motorola has almost disappeared from its shelves.

Samsung and Nokia swap positions regularly in the Russian handset top spot, but ZTE has also attracted strong attention from MTS. ZTE can offer exactly what Motorola currently can't, according to the Russian carrier - strong financing terms and a huge number of handsets ranging from ultra-low cost to midrange webphones. The Chinese vendor has also tapped into the burgeoning alliance between MTS and Vodafone, which will include joint development and procurement of handsets. MTS has introduced its own-branded phone, the MTS 236, the first tangible result of the Vodafone alliance formed late last year.

The MTS 236 was co-developed with Vodafone and made by ZTE, and according to MTS, represents the new breed of devices and distribution model, which will generate most growth for operators and their suppliers in the coming years. These will be midrange, web-enabled handsets with "a new distribution model of attractively priced featurephones bundled with service plans", said the carrier, which is adding other suppliers to its co-branded line-up, including low cost vendor Alcatel (no longer part of Alcatel-Lucent, but Chinese-based). The GSM-based MTS 236 ships this week at a cost of Rub1,050 ($34), or from Rub890 ($28) with a prepaid service plan.

Nokia is after an even more strategic position in MTS' affections than ZTE, enabling the Russian carrier's mobile internet services as uptake of such applications starts to boom, and so putting Ovi in pole position in a huge potential base. The two companies teamed up in June to launch the N97, in one of the first bases for Nokia's new flagship smartphone, and signed a broader memorandum of understanding to carry a range of the Finn's devices on the MTS retail network. It is allowing the cellco to launch its phones with an MTS user interface and exclusive applications, which should make the carrier more willing to subsidize the phone, balancing this with software revenues and improved customer retention.

"This partnership agreement with Nokia is a milestone in our development of the MTS proprietary retail network," said Shamolin in a statement at the time.

By sad contrast, the three main Russian phone retailers say Motorola's handsets have "all but disappeared", a comedown from 2004, when Motorola was briefly the country's top selling supplier on the back of its iconic RAZR. One retailer, Yevroset, told the Moscow Times that it now had fewer Motorola phones than stores (of which it has 3,700), blaming lack of deliveries and a shrinking product range, as well as Motorola's lack of flexibility in offering credit terms.

Fellow retailer Svyaznoi has fewer than 150 Moto phones in stock in its 1,790 stores, said a spokeswoman in the same issue. As for MTS, its 3,000 stores have entirely sold out of Motorola phones. The vendor responded that it had "taken a pause" in deliveries to Russia, but would launch new models there this fall, including its first Android phones, and was currently in talks with MTS and Yevroset about these.