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.
