iPhone to Russia, With Love

By Tim Beyers
August 25, 2008 | Comments (2)

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If China won't love Apple (Nasdaq: AAPL), Russia will. That's according to a Reuters report that says the iPhone is to be distributed by Russia's Mobile Telesystems (NYSE: MBT). As many as 3.5 million handsets are to be sold over the next two years, Reuters cites sources as claiming.

Really? Three and a half million sold? I find that difficult to believe when Polish iPhone carrier Orange recently hired actors to simulate demand for the local 3G launch. And it's not like the iEmpire is competing against a gaggle of slack-jawed losers; Nokia (NYSE: NOK), Research In Motion (Nasdaq: RIMM), and Palm (Nasdaq: PALM) are anything but.

Still, the data suggests that Apple's strategy of pervasiveness -- including a retail distribution deal with Best Buy (NYSE: BBY) -- is working: One analyst told Fortune that 3 million 3G iPhones were sold in its first month on sale. Apple Insider reports that Apple's rising mobile browser share points to 5 million 3G iPhones sold in the current quarter. And that's with connectivity problems.

Perhaps even more telling: News.com reports that there are 600,000 unauthorized iPhones in use in Russia, and many of those were purchased for far more than the rumored $900 retail price of the authorized version. How's that for demand?

Not all that impressive, actually. For as many iPhone users as Russia has already, China, which was said to have 400,000 "gray market" iPhones in use in April, is now home to more than 1 million unauthorized iPhones, all of which are reportedly operating on China Mobile's (NYSE: CHL) network.

The implication: If this deal gets done as expected, Chinese iWannabes will have a new and nearby source for their next million in unauthorized iPhones. Prepare to feel the love, Mother Russia.

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Fool contributor Tim Beyers owned shares of Nokia at the time of publication. He hunts for tech's best as a contributor to Motley Fool Rule Breakers.

Apple and Best Buy are Stock Advisor selections. Best Buy is also an Inside Value pick. Try either of these market-beating services free for 30 days. There's no obligation to subscribe. The Motley Fool owns shares of Best Buy. Its disclosure policy doesn't like Russia. It's home to too many bears.

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  • Report this Comment On August 25, 2008, at 3:44 PM, didwaniap wrote:

    "Orange recently hired actors to simulate demand "

    u mean a shower gel ad is ok if it uses actors to promote the demand. or the holywood stars should come to street and take a shower to balance the equation???

    anything is fair in mktg of a product.

  • Report this Comment On August 25, 2008, at 5:07 PM, babushnik wrote:

    It is my understanding that the "unauthorized" iPhones that you mention are the 1st generation ones that were sold without a contract and were easy to unlock. So, your implication that China will simply buy unauthorized iPhones from Russia seems misinformed.

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