Local and foreign developers take an interest in Russian mobile market. It is rapidly growing and given the country's 145+ million population it has a lot of potential. To find out latest trends, figures and facts about mobile and tablet market in Russia we interviewed Kiril Petrov, Managing Director, and Ilya Chernetskiy, Strategy Marketing Manager, from i-Free Innovations. I-Free is a St.Petersburg-based Russian software developer and distributor for mobile apps, e-commerce and marketing. It was founded in 2001 and it operates mostly in Russia and CIS. The company employs 350 people and apart from Russia and CIS has offices in India, China and Brazil.

ArcticStartup: What is mobile market like in Russia in terms of size and traction?

Kiril Petrov: In 2010 there were only 4M smartphone users, a year later that number was 9M and by the end of this year it is likely to reach over 22M. We estimate that by the end of this year Russia will have 7M Android users, 2.5M iPhone users and less than half of all the rest Symbian users. Market for mobile applications is growing rapidly. According to local experts, 138% more smartphones were sold in the first quarter of this year compared to the last. Hence, smartphone market will grow 2,5 times by the end of 2011. These estimates do not include black market (considerable in Russia). Plus, Russian smartphone users tend to buy a new phone every year, giving their old device to children or relatives.

AS: What mobile platforms are most popular in Russia?

KP: Symbian's marketshare is steadily declining. In the beginning of 2010 it had 73% marketshare, in the beginning of 2011 - 67% and by the end of this year it would hardly reach 45%. Android, on the other hand, shows considerable growth: from 20% in the beginning of 2011 to estimated 35% by the end of the year. iOS 's marketshire has been declining this year: from 14% to 12%. It is too early to estimate Bada's or WP7's marketshare, it would mostly depend on Samsung's and Microsoft's activity but together they would probably amount to 5% of the market.

AS: What kind of mobile applications are most popular in Russia?

KP: Here the picture is the same as in other countries: the most popular applications are of course games. They account for more than half of the time a smartphone user spends on all applications. After that come information services like weather forecasts or maps. Third place is occupied by social networks and fourth place by music applications.

AS: How about mobile payments?

KP: Micropayments in mobile games and other applications are fairly well-developed in Russia. One of the most popular types of payments is through a text message. Traditional payment models like GoogleCheck-Out are less popular in Russia, mostly because credit cards have not yet become as conventional means of payment as in other countries. However, in-game payments through a text message became popular in Russia even before they acquired popularity in Europe or US. Now this micropayment model is being transferred to smartphones.

AS: What business model is most common among local app developers?

KP: Different developers use different models. Nevertheless, I think the most profitable are paid applications with free trail period and internal monetization (when for a small sum users can activate certain gaming features).

Ilya Chernetskiy: By the way, more than half of the Top Grossing applications are free, that is they generate revenue from inside micropayments. The volume of in-payments has already reached 14% even though they were introduced a few months ago.

AS: How many mobile apps are copied from popular applications in US or Europe?

KP: Not that many. There are a lot of local developments and experiments which are, by the way, the most popular at the moment. Many applications are developed by big local Internet companies. However, the process of copying and cloning is gaining momentum.

AS: Who dominates the mobile apps market in Russia?

KP: The leading local player is of course Yandex - the biggest Russian search engine with a whole line of own mobile applications like Yandex.Market, Yandex.Maps etc. It is followed by Mail.ru Group with the application for the biggest local social network Vkontakte and another application Mail.ru Agent. Another notable player is SPBSoftware, renowned around the globe since the times of WindowsMobile. Now their most popular application is SpbShell5 (mobile software). There are also specialized developers among the leaders like MSRLimited, that has developed the most popular paid application for Android - music player PowerAMP, or Herocraft, leading Russian mobile game developer.

Ilya Chernetskiy: Other successful developers include Zepto Labs with their popular Cut the Rope app; Joybits with their Doodle God app and Game Insight with their ultra-popular free-to-play games Paradise Island и Syndycate.

KP: Annual revenue of these companies, excluding Yandex and Mail.ru Group, is anything between $3-$5M to $20-$30M. Besides, market for custom-made applications is rapidly growing.

AS: Finally, what is tablet market like in Russia?

KP: Tablets appeared on global markets last year and first iPads were sold in Russia only last autumn. Hence, by the end of 2010 not more than 200 000 devices were sold in Russia, while worldwide the number was 18M. Clearly the market is now growing very fast. There are now a dozen of foreign and local companies selling cheaper tablets based on Android. Obviously, the leading players would remain Apple, Samsung, HTC and LG. It is estimated that by the end of the year at least 1M tablets would be sold in Russia. Many app developers are already making tablet versions of their applications and there are some that specialize exclusively on tablet apps. The latter focus primarily on international markets, of course.

Image by Biscarotte