Apple’s PR fiasco in Russia

This letter was sent to PR email addresses at Apple and to major Mac publications

Dear Apple,

I would like to share with you the information that in my opinion is extremely important for Apple and that might help avoiding failure on emerging market such as Russia.

As you may know, Apple recently started operations in Russia, by opening the office in Moscow. Yesterday they held the first press conference which is considered by many as a total failure of Apple — a failure to understand the market and a failure to approach the market. Below I will explain in more details what exactly I mean by this.
But I want to stress the fact that Russia is one of the fastest growing markets in the world, and since the US’ economy is in the slowdown at the moment, Apple should be interested in gaining some grounds in the emerging markets, because they can provide the needed growth to the company. I know that Apple has very ambitious plans regarding Russia, but by its own actions the company may lose this market forever.

First I would like to point out the issue of pricing for the Apple’s products. I know that Apple’s products aren’t cheap, and they have its own advantages that are quite worth the premium we pay. However, when the price for the gadgets is 75% higher than it’s in the US, it just looks extremely strange for the locals. Even though Russia has oil and other natural resources, the average salary here is still mere $300 per month. I am not quite sure how exactly Apple expects to sell already expensive thing for even higher price? How higher, you might ask?

Well, let’s take a look at the iPod touch, which is one of the best-selling iPods right now. In the US 16GB version goes for 399 plus tax. In Russia it’s $710 if you convert local rubles to the US dollars – almost 78% higher than it’s in the land of free. MacBook Air with SSD hard drive, that costs $3098 in Online Apple Store, was announced to have the price at almost $5000 here in Russia. For me the difference is unbelievable — because this is much higher than the average price in Europe. Especially when you consider that iPod touch still doesn’t have a proper Russian localization (by the way, it is illegal in Russia to sell goods and gadgets which are not properly localized). And MacBook Air, as journalists were told at the press-conference, won’t have Russian letters on the keyboard – that’s illegal in Russia too.

What danger for Apple I can foresee here? Well, I’m afraid that instead of buying gadgets here in Russia (at these outrageous prices) consumers will either look for some other brands (because Apple doesn’t look so attractive at these prices) or they will try to get the machines (and iPods) somewhere else. A lot more people will start buying stuff in Finland (that borders with Russia) where for some reason Apple gear is much cheaper, and some will bring stuff from the US. All this still means sales for Apple, but it will be much harder for Apple Russia to get to their sales target numbers (and they are very aggressive, as far as I know), and second, all gear bought abroad will have to be supported here, in Russia. But sales aren’t here, so it’s a lose-lose situation, as it seems to me and a lot of my colleagues.

The whole press conference by itself seems to be pretty much useless, because it went about the movie rentals, Apple TV update, iPod touch update, etc – all great stuff, but with one little problem. iTunes Store doesn’t exist in Russia, and Apple doesn’t have plans to bring one here. And it makes all these news completely obsolete and useless.

And here is the worst thing that happened at that press conference (let me remind you, it was officially held by Apple). It demonstrates the level of arrogance that Apple has for this market and its consumers – I have never thought that I would say something like that after being a Mac user for 14 years. As I’ve written above, iPod touch is officially available in Russia, even without Russian keyboard. However, iTunes Store is not here, so people cannot buy “january application upgrade” from Apple for their iPods. Period.

So when a journalist asked the Apple representative (his first name was Eric, I don’t have his last name) what he’s supposed to do if he wants TO BUY these new apps, the answer was (AND I QUOTE!) “well, buy a new iPod touch with 1.1.3 firmware — it will have these applications already installed”.
I probably don’t need to remind you that this player sells in Russia for $700, so in order to get the apps you have to shell out another seven hundred dollars? What kind of attitude towards the consumer is that? I would expect something like this from Microsoft, but not from Apple.

This dialog has became public since and people are furious about it. if Apple is really interested in this market (and why else would the company come here anyway?) something has to change. Because people are angry, and it’s just a matter of time that someone decides to file a claim to consumer rights protection organization about discrimination and violations that Apple does (on purpose or unintentionally). In Russia RosPotrebNadzor (organization similar to Attorney General Office in the US) is the extremely powerful organization that can forbid operating on the market till the certain conditions are met. This could be a big problem for Apple and its growth.

I don’t know what results this letter is supposed to produce. May be Apple will react somehow and will pay more attention to the Russian and European market in general. May be something else will change. But if nothing happens, if this letter is ignored, then I’ll know (and other people will know too) that something is really wrong with Apple…

Best regards,
Alex Patsay
journalist and Mac user
http://alexmak.net

PS I am also going to send this letter to major Mac and news publications.