The Wall Street Journal: IPhone Is an Expensive Drug, Says Russian Mobile Chief

U.S. telecom executives are cautious about speaking their mind when it comes to tech heavyweights like Apple and Google, but not Mikhail Shamolin, president of MTS, Russia’s largest cellphone company.
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In an interview with Wall Street Journal editorial staff, he said the negotiations to bring the iPhone to Russia last fall were like “the negotiations of a junkie and a narcotics salesman,” because of the pent-up demand for the device.

But “Apple was operating on a take-it-or-leave-it strategy,” he said, resulting in a high price — about $1,000 — that puts it out of reach for many Russians, since operators in the country don’t subsidize handsets.

The largest wireless operators in Russia all offer the iPhone 3G now, but they’ve only sold “a few hundred thousand” units, Mr. Shamolin said, because of the price tag and the dwindling supply of consumer financing amid the global financial crisis. Such credit “was one way to sell iPhones and that went away with the crisis,” Mr. Shamolin said.

Apple spokesman Steve Dowling declined to comment.

Mr. Shamolin estimated that users have smuggled about 500,000 iPhones into Russia that were purchased overseas at cheaper rates. Once “unlocked” from carriers in the country where purchases were made, such devices can be used on any operator’s network. Globally, Apple has sold more than 17 million iPhones to date.

He said that unlike some emerging-market operators, such as China Mobile, he isn’t interested in Google’s Android operating system. Google as a potential competitor as MTS builds out its own content and software portal, he said. “We don’t want to give that revenue to Google or Nokia or anyone else who wants to get their hands on it.”