IDC: Provinces Drive Russian Handset Boom

June 3, 2005

The growth curve for the Russian handset market was again steep in 2004, according to research from IDC, with unit shipments climbing by more than 59% year-on-year to almost 27 million units and revenue leaping by nearly 90% to more than $4.52 billion. IDC found that growth slowed in St. Petersburg and Moscow, which now have penetration levels that match major cities in Central Europe, while the provinces exhibited double-digit increases in uptake. The upsurge in revenue stemmed from an 18% year-on-year jump in average handset prices.

"While Russia's two main cities have started to reach saturation, the rest of the country is still hot for handsets," said Simon Baker, program manager for mobile phones, IDC CEMA. "Operators don't generally subsidize handsets, meaning Russians tend to be very selective when making a purchase."

Motorola and Samsung moved ahead of Siemens to claim first and second positions in unit shipments in Russia last year, but the top four vendors were very closely matched. Siemens held third place, but just barely, as Nokia was less than a percentage point away. Together, these four vendors accounted for more than 77% of unit shipments in the market in 2004, said IDC. Motorola had the most popular handset on the market, the low-end C20x series, which took the top spot in Moscow and the provinces. Motorola also landed another model among the top-five bestsellers, along with Samsung, Siemens and Nokia. The vast majority of phones sold last year in Russia were based on Global System for Mobile Communications (GSM). Code Division Multiple Access (CDMA) technology is a niche product and Universal Mobile Telecommunications System (UMTS) has not yet been licensed.

Increasingly characterized by replacement buying, sales of mobile handsets in the metropolitan areas of Moscow and St. Petersburg will flatten this year and the next, said IDC. By contrast, IDC expects solid growth to continue in the provinces for the next few years.

"There is a definite trend upmarket in the middle price segments," said Baker, "but the importance of expansion in the regions means that low-end models will remain a cornerstone of the Russian handset market."

IDC's report - Russia Mobile Phone 2005–2009 Forecast and 2004 Vendor Shares (Doc #EMH1M, March 2005) - assesses the market for mobile telephone handsets in Russia through 2009. It segments the market by technology, price band and geography (Moscow/Moscow region, St. Petersburg/Leningrad region, and the rest of Russia). It breaks down the GSM market into eight price bands (<$80, $80–100, $100–120, $120–150, $150–$200, $200–300, $300–$450, >$450), listing for each band the top-five models, market shares and forecasts through 2009. The study also analyzes sales and prospects for handsets based on CDMA, UMTS, and (D)AMPS (Advanced Mobile Phone Service) standards.

Source: IDC.