High Mobile Usage in Russia, but Lagging Technology

eMarketer Digital Intelligence
NOVEMBER 8, 2011

Young consumers drive adoption of mobile internet, but barriers remain

Late in October, as tech geeks and blogs were focusing on Siri, there was an iPhone story that may have slid under the radar: the 4S includes support for GLONASS, the Russian flavor of GPS, which powers many of the location features on mobile devices. Many theorized this was a way for Apple to avoid a hefty import tax on the device in Russia, but that remains to be seen as the iPhone 4S isn’t even officially for sale in the country yet.

Apple’s intentions, however, seem clear. Like other multinational brands, Apple wants to expand its reach among the affluent and middle classes of emerging markets, including Russia, and for good reason. These markets will be major growth engines for mobile device sales in the future, and mobile will be an important contact point between brands and consumers.

Mobile phones are immensely popular in Russia. eMarketer estimates that there will be 185.9 million mobile phone subscriptions in the country by the end of 2011, a number 34% higher than the total population.

A study by Advanced Communications & Media (AC&M) was more bullish, finding that, with 225.2 million mobile phone subscriptions in September 2011, there were approximately 1.5 valid SIM cards for every person in Russia.

Mobile Phone Subscriptions and Penetration in Russia, 2008-2011 (millions and % of population)

But higher-end smartphones like the iPhone 4S may be a long way off for the average consumer in Russia. According to Informa Telecoms & Media, the majority of users are still connecting via older, 2G networks. In Q2 2011, the firm estimated 15 million 3G subscriptions in the country, a total penetration of 7%.

Even with low 3G penetration, users are eager to access advanced mobile content. eMarketer projects 29 million mobile internet users in the country by December 2011.

In August 2011, the Public Opinion Foundation (FOM) in Russia found that home internet access grew by 10%, but since household broadband penetration remained flat, they attributed the increase to mobile internet usage. A total of 21.2 million people, or 17% of the population, accessed the mobile web at least once per month. Demographic breakouts revealed that younger consumers were driving mobile internet uptake; respondents ages 12 to 17 and ages 18 to 24 accessed the mobile web at rates of 51% and 45%, respectively.

Internet Users and Mobile Internet Users in Russia, by Age, July-Aug 2011 (% of respondents in each group)

Smartphone penetration rates remain low, estimated at 11% by FOM, but it’s only a matter of time before middle-class and younger users demand more engaging mobile content.

Apple may not be able to sell millions of iPhone 4S’s to consumers in Russia, but at the right price point, the iPhone 3G or 3GS could be a huge hit. In addition, low-cost Android and Nokia phones are waiting in the wings for aspiring mobile consumers.

For now, mobile campaigns will be most effective targeting affluent smartphone users and younger age groups using feature phones to access the web.