Russia’s smartphone market shows full recovery from Rouble crash in 2014, according to IDC's latest research


Apr 3, 2018

Russia’s smartphone market continued to perform well in the last quarter of 2017 (Q4 2017), as the new iPhone models sold well. These include the 8 and 8 Plus launched at the end of September, followed by the premium X in November, according to IDC’s Worldwide Quarterly Mobile Phone Tracker.

“This was the best quarter ever for Apple in the Russian phone market, even surpassing the blow-out quarter during the rouble crisis at the end of 2014,” says Natalia Vinogradova, program manager for mobile devices with IDC Russia. “The new models are helping Apple approach a 20% volume share of the overall smartphone market, compared to 10% for the same period of 2016."

Although cheaper models in the Apple portfolio still account for a lot of the sales, Apple is close to capturing half the value of the total Russian smartphone market. Apple’s revenue on the Russian market reached around $2.6 billion (excluding VAT) in 2017. Second-placed Samsung posted revenue of $1.5 billion, while selling 50% more smartphones than Apple.

In volume terms, Samsung placed first on the Russian market, with Xiaomi taking second place on the back of considerable smartphone shipments for the second quarter in a row. Third-placed Huawei has seen rising unit shipments in the country, although its growth is less pronounced than that of Xiaomi. Together, the two Chinese vendors Xiaomi and Huawei now account for more than a quarter of the Android market in Russia, with combined shipments overtaking those of Samsung. They have been the main beneficiaries from the withdrawal of Lenovo, which shipped no smartphones into Russia in Q4 2017.

Thanks in part to Apple, total Russian phone market value picked up substantially in 2017 — rising nearly 25% from 2016, measured in U.S. dollars — and coming close to the pre-crisis total in 2014. The rebound was especially notable as it comes against a background of continuing subdued consumer confidence, with real disposable income on a downward slope since the onset of the rouble crash at the end of 2014. Despite some appreciation in recent months, the rouble exchange rate remains well below its pre-crisis level.

"The price segmentation of the market has also changed. The rouble crisis doubled the proportion of the market accounted for by the cheapest smartphone models, but now it has almost returned to pre-crisis segmentation, even though Russians are less well off in dollar terms,” says Simon Baker, program director of mobile devices research in IDC CEMA.”

The market value increase is being driven by sales of 4G devices, notes Baker, which are more expensive than 3G devices. In the first quarter of 2016, less than 50% of the smartphones sold in Russia were LTE-capable, while in the fourth quarter of 2017, this figure had risen to more than 80%.

"The resurgence in expenditure on devices is evidence of how mobile communications is becoming more central to the way Russians live," adds Baker. "This is made very clear by the boom in data traffic." According to official Russian government data, mobile video and data traffic accelerated rapidly in the course of 2017 and is now about three times higher than it was in 2015.

Fourth generation networks are the real facilitator of this, and two of the three main Russian networks have reported that LTE now accounts for at least half of their data traffic.

Initially, Russia lagged behind Western European countries in the implementation of fourth-generation mobile technology, in part because of a shortage of frequency available for the new networks. Then the consumer shift to 4G devices slowed after the 2014 rouble crash.

"Russia's 4G market is now catching up with those in Western Europe, and this is reflected in the rapid rise in mobile data consumption, particularly of media and video," notes Baker. "Russia will soon be counted among the countries with a mature 4G market – and 5G is not so far down the road."

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