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Why Apple's iPhones have no appeal in Russia

Wednesday, 2 Oct 2013 | 8:34 AM ET
The smartphone industry in Russia
Wednesday, 2 Oct 2013 | 2:40 AM ET
Alexey Kornya, CFO of MTS, says that the company is focusing on cheap smartphones as high end smartphones like Apple's iPhone's are not in high demand because they are too expensive.

Apple's new iPhone may have caused queues in New York, Berlin, Beijing and London but over in Russia the streets were bare with no official release date of the company's latest smartphone expected until November, according to local media reports.

This delay highlights how the U.S. tech giant is faring in Russia, with falling market share and major carriers turning their backs on the smartphones.

Alexey Kornya, the chief financial officer of Russia's biggest mobile service provider MTS, told CNBC that the company is focusing on cheap smartphones as demand for iPhones is low.

(Read More: Russia dealt triple blow over its economy)

"They are not subsidizing in Russia," he said. "You have to pay in full, that is why there is very limited demand for non-subsidized expensive phones and that is why we are moving more focus on cheap smartphones."

An iPhone in Russia could cost over $1000, he said, adding that the bestselling smartphone sold by MTS in the last two months was just $60.

"High-end smartphones like Apple, Samsung of course they are important but they are not much in quantity because we are not subsidizing," he said.

Smartphone shipments were set to grow by over 30 percent this year according to research firm Canalys, but at the same time Apple's market share has contracted in the country.

(Read More: Apple leaves Coke flat in global top brand survey)

MTS, as well as Russia's two other to mobile operators - Megafon and Vimpelcom -- have stopped selling the iPhone since reaching a deal back in 2008.

Pete Cunningham, a mobile analyst at Canalys told CNBC that price is certainly a factor in Russia and consumers favored lower-cost Android phones.

But Cunningham said that he wouldn't say the company was failing in Russia, with expectations that the new iPhone 5S sold very well in unofficial trading channels, known as the grey market.

(Read More: Apple, China Mobile deal may be coming soon)

"There is a part of Russian society that is very affluent," he said.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81

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