Concerns regarding defective devices and repair guarantees with Samsung have caused four Russian businesses to stop selling Samsung smartphones. Russian carriers, PJSC MegaFon and VimpelCom are joined by retailers, Euroset Holding NV and Syyaznoy in the Samsung embargo. These four businesses operate more than eleven thousand stores across the country according to INFOLine, a research firm based in St. Petersburg. An email from carrier VimpelCom stated that they had stopped buying devices because the fault ratio had reached seven percent, higher than competitor brands. Svyaznoy stopped ordering new Samsung devices in June but has continued selling down the existing stock levels – the retailer estimates that Samsung’s Russian market share has dropped by twenty five percent in recent months, although it is not clear on what data this information is based on. The retailer Euroset stopped reordering Samsung devices in May and Chief Executive Officer Alexander Malis stated: “The volume of defective units surged, our customers were unhappy, and Euroset had to bear repair costs.” In other words, Samsung left Euroset to fix the faulty customer devices.
Samsung replied by email and stated that it “remains committed to providing the best possible products for Russian consumers,” although the South Korean electronics giant declined to comment on the relationship with Russian businesses. IDC estimates that Samsung sold $1.46 billion worth of smartphones in Russia during 2014, a little under one-quarter of the market by unit sales. Instead of selling Samsung boxes, these Russian retailers are selling Apple and Lenovo boxes: good news for Apple and Lenovo, not so good for Samsung, which is already struggling in 2015 with poorer than hoped results.
This is the first report we have seen of Samsung devices having a higher fail rate compared with competitors: traditionally, Samsung devices have had a low “dead on arrival” ratio compared with competitor products. It is unclear what the issues are: perhaps Samsung’s quality control has let too many faulty products through, or perhaps these Russian retailers have been unlucky over the space of a few months? However, it seems that Samsung not picking up the tab and the retailers paying for the repair costs is a sticking point.