updated 07:02 pm EST, Tue February 18, 2014
Very modest 1.57 million units represents major progress
While a hair over a million and a half iPhones sold sounds (and is) pretty bad for a company with the influence and presence of Apple, the 1.57 million units sold in Russia in 2013 represent something of a (small) triumph: not only does it double the number of iPhones sold in the country compared to 2012, the iPhone was unavailable on any Russia's major carriers for the entire first half of the year.
The falling out between Apple and its main partners came about over a difference between Apple's standard carrier requirements and Russian law. Apple's contract requires certain amounts in handset subsidies, money spent by the carrier on promotion, and minimum sales agreements. However, the Russian government doesn't allow carriers to discount phones in exchange for contracts -- leaving the carriers between a rock and a hard place.
What has changed to allow the carriers to resume taking the iPhone on is unclear, but until mid-year Apple promoted the iPhone primarily through its reseller stores (which are scarce in Russia) and major electronics stores. This accounted for roughly half of the iPhones sold in 2013, sources believe. Russian carriers VimpelCom and Mobile TeleSystems took notice and were able to make arrangements to resume carrying the iPhone in October, with the largest telecom MegaFon re-signing in December.
As of January, Apple had about nine percent of the overall Russian smartphone market -- but characteristically, made about 20 percent of the revenues in the industry there. Unlike most other countries, the cheaper iPhone 4 and 4S (the former continuing to be made for some developing markets, rumor has it) are the most popular models, though the iPhone 5c and 5s are expected to gain in sales now that the carriers are able to offer the devices in conjunction with their services.
Another factor holding back Apple in Russia is the fact that the iPhone 5 family of models are prohibitively expensive in Russia, starting at around $918. Apple has said that a sizable portion of that cost is down to sales tax, import fees and miscellaneous distribution costs.