1. Mobile Internet
in Russia
Prepared by J'son & Partners Consulting for Google
Android and Mobile Marketing, Google Russia
Android Google Confidential and Proprietary
and Mobile Marketing, Google Russia

2. Table of Contents
1. Mobile Internet users
1.1. Number of active mobile Internet users
1.2. Number of active mobile Internet users by regions of Russia
1.3. User profile
2. Mobile Internet access devices
2.1. Overview of mobile Internet access devices
2.2. Tablet PCs
2.3. Smartphones
3. Mobile Internet usage on smartphones
3.1. Frequency of mobile Internet usage
3.2. Average duration of daily session
3.3. Mobile Internet usage experience
3.4. Places where smartphones are used
3.5. Incentivising smartphone usage
3.6. Mobile Internet advertising
3.7. Using a smartphone to make purchases
3.8. Purchases with a smartphone
3.9. Reasons for using mobile Internet: top 10 actions
3.9.1 Reasons for using mobile Internet: search applications
3.9.2 Reasons for using mobile Internet: video applications
3.9.3 Reasons for using mobile Internet: social networking sites
4. Technical parameters for mobile Internet usage
4.1. 3G network coverage map
4.2. Mobile Internet traffic
4.3. Average traffic for one subscriber
4.4. Cost of mobile Internet
5. Forecasts, trends and barriers for mobile Internet development in Russia
5.1. The dynamic of smartphone prices and forecast
5.2. Dynamic for 3G network coverage
5.3. Growth of sales market for smartphones and other mobile Internet access devices
2

3. 1. Mobile Internet users
1.1. Number of active Internet users from mobile devices as of the first six months of 2011
Data traffic from smartphones accounts for about 75% of all
data traffic from mobile devices*
1 452
250
121
381
75
27,2
0,3 14 12
3G tablets Mobile phones Smartphones
Number of subscribers, Average traffic per 1 Total traffic per
Traffic per month, TB million subscriber, MB month, TB
3G tablets 0.3 250 75
Number of subscribers, USB modems 10.3 1,430 14,729
million Smartphones 12.0 121 1,452
Mobile phones 27.2 14 381
МBOU *In this study, the term „mobile device‟ is understood as smartphones, mobile telephones and tablet PCs.
3

4. 1. Mobile Internet users
1.2. Number and share of the population of active Internet users from mobile devices by region of Russia
The development of the mobile Internet is rapidly eradicating the “digital divide” in the outlying
regions of Russia. The share of active* data subscribers in Moscow and St Petersburg accounts for
around 40% of the total population
Subscribers for data Share of data subscribers in the total population by region of Russia,
from mobile devices, million people as of the end of Q2 2011:
48 53
34 39 43
2009A 2010A 2011E 2012F 2013F
28%
of the population of Russia
who are active data
users** 5-20%
20-25%
25-30%
30-35%
more than 35%
**as of Q2 2011 * An active data subscriber is a subscriber who has used a data service at least once in the last month
4

5. 1. Mobile Internet users
1.3. Smartphone user profile General demographic characteristics
18 - 24 37%
25 - 34 31%
35 - 44
Age 45 - 54 11%
20%
55 + 2%
Average age: 30.8
61%
Men
Gender Women 39%
Primary 4%
Education Secondary
Higher
36%
60%
67%
Full time
12%
Part-time employment
Employment status Student
11%
8%
Unemployed/
Working from home
High (more than RUB 50,000) 24%
Monthly household Average (RUB 25,001 – 50,000) 42%
income Low (RUB 25,000 and lower) 27%
5

6. 1. Mobile Internet users
1.3. Smartphone user profile. Demographic characteristics by operating system
Men are the principal users of smartphones.
The majority of smartphone users are aged between 18 and 34.
Symbian 28% 72%
Windows 32% 68%
Mobile/Phone
Gender 40% 60%
Android
iOS 41% 59%
Женщины
Women Мужчины
Men
Symbian 27% 31% 29% 8% 5%
Age Windows 42% 28% 17% 12% 1%
Mobile/Phone
Android 42% 28% 20% 8% 2%
iOS 49% 30% 14% 8%
18-24 25-34 35-44 45-54 55 и старше
and older
6

7. 1. Mobile Internet users
1.3. Smartphone user profile. Experience of smartphone usage by operating system
Of smartphone owners on the Android platform, the greatest share is occupied by new users
(with less than one year‟s experience of smartphone use). For many smartphone users on the Android
platform, this is their first “smart telephone”
How long have you been using smartphones?
Symbian 24% 76%
Symbian
Windowa
Windows
Mobile/Phone 34% 66%
Mobile/Phon
e
iOS 44% 56%
iOS
Android 61% 39%
Android
До года a year
Less than Более года year
More than a
7

8. 2. Mobile Internet access devices
2.1. Overview of mobile Internet access devices: tablet PCs
In 2010, the sales volume for tablet PCs in Russia came to around 400,000 devices – approximately 10 times
less than smartphone sales. In 2011, we expect the size of the tablet PC market to double
Sales volume for PC tablets in Russia, million items
8

9. 2. Mobile Internet access devices
2.2. Overview of mobile Internet access devices: smartphones
The volume of smartphone sales* in Russia will double in 2011 compared with that of 2010
Share of smartphones in total sales of mobile
Sales volume for smartphones in Russia, million items
terminals in Russia, %
36%
29%
22%
15
11,8 11%
8,6
6%
3,9
1,9
2009A 2010A 2011E 2012F 2013F 2009A 2010A 2011E 2012F 2013F
* The smartphone is defined as a multi-functional mobile communication device.
The following main criteria identify a device as a smartphone:
• the operating system that manages the device and enables the installation of additional applications, including those from external developers
(Java2Me applications are not included): Symbian (version 6 and higher), Windows OS for mobile devices, Palm OS, Linux, Android, Maemo; Bada
• advanced communication features – email, HTML page viewing, data synchronisation with PC, etc.;
• support for standard business applications.
9

10. 2. Mobile Internet access devices
2.2.1 Smartphones by operating system
In Q4 2011 in Russia, sales of Android smartphones will for the first time exceed
sales of Symbian smartphones
Smartphone sales
by operating systems: 2008-2011
8,3% 2,4%
15,4% 5,0%
4,5%
2,8% 26,3% 13,5%
3,8%
6,0%
11,4%
0,8% 33,9%
81,2%
66,7% 71,6%
45,1% Smartphone sales by operating
system: 2011
3% 2% 2% 3%
4% 4% 5%
6%
2008A 2009A 2010A 2011E 10% 11% 15%
17% 16%
25%
Other WM Apple Bada Android Symbian 37%
45%
67% 58%
42%
30%
1Q2011A 2Q2011A 3Q2011E 4Q2011F
Other WM Apple Bada Android Symbian
10

11. 2. Mobile Internet access devices
2.2.2 Average price of smartphones
Over the last 3 years, the average price for a smartphone has fallen by 33%.
There has been a significant increase in the share of sales of smartphones costing less than 200 USD
Average price of a smartphone, USD
518
452
377 331 305 285
2008A 2009A 2010A 2011E 2012F 2013F
Market structure for smartphone sales
by price segment
more than 500 USD
350-500 USD
The average price of a smartphone 200-350 USD
at the end of the first six months of
less than 200 USD
2011 was 350 USD
11

12. 2. Mobile Internet access devices
2.2.3 Average price of smartphones by operating system
The average price of an Apple smartphone during the last 2 years has increased by 70%,
prices for smartphones on Android, Symbian and WM platforms have fallen
Dynamic of the average smartphone price by operating system, USD
Android
744
637
497 483 462 415 415
393
Symbian Windows Mobile
399 437 488 402 391 352 306 414 492 472 472 475 435 434 404 462 351
237 300 293
12

13. 2. Mobile Internet access devices
2.2.4 Average retail price for smartphones by region
The highest prices for smartphones – are in the outlying regions of Russia and the Moscow Region.
The high cost for a smartphone in Moscow of around 390 USD is explained by Russia‟s highest share
of sales in this region for Apple and Android smartphones
The average retail price for a smartphone by region of Russia
as at the end of the first six months of 2011:
Average cost of a smartphone in the
first six months of 2011, USD
On average for Russia 350
Moscow 390
St Petersburg 361
More than 350 USD
330-350 USD
324-330 USD
13

14. 2. Mobile Internet access devices
2.2.5 Regional structure of smartphone sales
The Top 10 regions of Russia currently account for around a half of all
smartphone sales
Regional sales structure for smartphones, first six months of 2011:
Smartphone sales structure, Top 10 regions,
first six months of 2011
Region Share
Moscow region, Moscow 22.4%
Leningrad Region 6.5%
Krasnodar Krai 4.2%
Sverdlovsk Region 3.5%
Rostov Region 2.7%
Tatarstan Republic 2.7%
Chelyabinsk Region 2.5%
Nizhniy Novgorod Region 2.5%
Samara Region 2.5%
Republic of Bashkortostan 2.4%
Over 5%
3 – 5%
2 – 3%
1 – 2%
0 – 1%
Around 50% of all
smartphones are sold in
the Top 10 Russian
regions
14

15. 2. Mobile Internet access devices
2.2.6 Specific sales of smartphones by region
The highest specific sales of smartphones - at more than 5 devices
per 1000 people per month - are recorded in Moscow and the Moscow Region.
Specific sales of smartphones: number of devices per 1000 people per month
Specific sales of smartphones, Top 10 regions,
first six months of 2011
Region Share
Moscow region, Moscow 5.50
Khabarovsk Krai 4.61
Kaluga region 4.35
Krasnodar Krai 4.18
Tyumen Region 4.15
Sverdlovsk Region 4.09
Leningrad Region 4.00
Samara Region 3.97
Nizhniy Novgorod Region 3.79
Sakhalin Oblast 3.72
5 – 5.5
4-5
3-4
0-3
15

16. 2. Mobile Internet access devices
2.2.7 Smartphone profile: performance
In the last 3 years, the smartphone has become twice as fast and three times “smarter”
Processor speed and RAM*
Processor speed (MHz) RAM (MB)
547 187
488
452 142
122
303
69
2008 2009 2010 1H2011 2008 2009 2010 1H2011
*Average weighted indicators for 2008 smartphone performance – first six months of 2011
16 16

17. 2. Mobile Internet access devices
2.2.8 Smartphone profile: functional
In 3 years, there has been a significant increase in the share of touchscreen and GPS smartphones as
well as the average screen size of smartphones
3G module GPS module
11% 18% 29% 27% 29% 28% 20%
Нет
No 67% Нет
No
89% 82% 71% 73% 71% 72% 80%
Есть
Yes 33% Есть
Yes
2008 2009 2010 1H 2011 2008 2009 2010 1H 2011
Touch Screen Screen size (inches)*
Дюймы
3.0 3.1
Inches
21% 15% 2.9
38%
78% Нет
No
62% 79% 85% 2.4
22% Есть
Yes
2008 2009 2010 1H 2011
2008 2009 2010 1H 2011
*average weighted indicator for 2008 screen size – first six months of 2011
17

18. 2. Mobile Internet access devices
2.2.9 Smartphone profile: average number of applications installed and used
On average, 15 applications are installed on a smartphone, and over the last 30 days
6 applications were used. Charged applications account for 20% of the total number of installed applications
Number of installed 15 applications
applications on average
3% 20% 37% 22% 14% 4%
An average of
Number of applications
used over 6 applications
the last 30 days 3%
10% 45% 34% 8%
Number of charged An average of
applications
1% 3 applications
73% 19% 6%
1%
not one 1-4 5 - 10 11 - 20 21 - 50 51+
applications applications applications applications applications
How many applications are currently installed on your smartphone?
How many applications have you used in the last 30 days?
How many charged applications have you purchased through an app store?
18

19. 2. Mobile Internet access devices
2.3. Mobile content market
One of the fastest growing market segments for mobile content is the sale of applications in app stores.
In 2010, the share of this segment increased by a factor of 2.5.
Mobile content market 2582
by content type, USD million
1798
1431 760
1133
355 296
172 292 497
70 286
255 88
360 143 88
55 86
79
766 898
584 701
40 43 44 45
mobile phone content market
2009 2010 2011 2012
Information content audio and RBT graphic content video and TV games applications
applications (including games) - content for smartphones with OS video (incl. TV content) - pay-per-view and/or downloading video to a mobile phone
RBT (Ringback Tone) - melody instead of ringtone games - Java games for phones with no OS
graphic content - pictures and screensavers for mobiles information content – subscription (news, events guide, weather, currency exchange rates)
19

20. 2. Mobile Internet access devices
2.3.1 Mobile content market: app stores
A large proportion of the applications currently available in stores
are paid apps. Average cost of an application is USD 3.62
Ratio of paid to free applications, available to download
Average cost* of apps by type, USD:
from app stores*
Business 5.7
4.99 Среднее
31% 69%
Navigation Average
Books 4.44
3.71 Бесплатные
Free Платные
Charged
Education
3.66
Travel
Lifestyle 3
Nokia 15% 85%
Health/Fitness 2.97
Finances 2.93
2.85 Windows 22% 78%
Sport
Productivity 2.74
Weather 2.53 BlackBerry 24% 76%
Entertainment 2.5
Music 2.45 28% 72%
Average app Apple
Social 2.28 cost in store:
Photography 2.11
3.62 USD Palm 32% 68%
News 2.05
Games 1.97
Android 64% 36%
*data as at the end of second quarter of 2011
20

21. 2. Mobile Internet access devices
2.3.2 Mobile content market: app stores
For the period from 2009 to the present, the number of app downloads from app stores has
increased almost 10-fold. The most popular apps are games and entertainment applications
Dynamic of the total number of user app downloads in app stores, Growth dynamic of the total number of apps available in app stores
million units, 2009-2011. for the first six months of 2011, thousand units.
256
76
26
2009 2010 2011 1 Q 2011 2 Q 2011
24% Share of apps by type: in the structure of applications, available in app stores
23% and in the structure of user downloads, first half of 2011
20%
12%
11%
7% 7% 7%
6% 6%
5% 4%
2% 3%
2% 1% 2% 3% 2% 2%
Игры
Games Развлечения Инструменты
Entertainment Tools Социальные Продуктивити
Social Productivity Стиль жизни
Lifestyle Фотография
Photography Музыка
Music Путешествия
Travel Здоровье и
Health and
сети
networking sites фитнес
fitness
Share of apps downloaded Share of available apps
21

22. 3. Mobile Internet usage on smartphones
3.1. Frequency of mobile Internet use (days a week)
32% of smartphone owners use mobile Internet daily; around a half of users use it 4 to 7 days a week.
A PC is used far more often for daily Internet access
How often in the last week have you been on the Internet (using a PC or smartphone)?
Smartphone
PC
7 of 7 6 of 7 5 of 7 4 of 7 3 of 7 2 of 7 1 of 7 0
22

23. 3. Mobile Internet usage on smartphones
3.2. Average duration of daily session
A PC is used more often than smartphones for several long online sessions a day. Smartphones are
used more often for one short online session.
How much time did you spend on the Internet yesterday (using a PC or a smartphone)?
5% 29% 17% 30% 15% 4%
Smartphone
1%
5% 70% 5% 17% 2%
PC
One long One short Several long
Several short Short and long n/a
23

24. 3. Mobile Internet usage on smartphones
3.3. Mobile Internet usage experience
For 53% of users, this is their first smartphone. 39% of smartphone users have less than one year‟s
experience
Experience of smartphone usage
100%
9%
90%
13%
80%
70% 17%
60%
53% 47% 50% 18%
40%
15%
30%
9%
20%
9%
10%
10%
Да
Yes Нет
No 0%
Is this your first smartphone?
How long have you used your smartphone?
24

25. 3. Mobile Internet usage on smartphones
3.4. Places where smartphones are used
Smartphones are used most often at home, “on the go” and at work
Where do you use your smartphone?
Where have you used your smartphone in the last 7 days?
At home
On the go
At work
On public transport
In a cafe
In shops
In public places
In a restaurant
At school
At the airport
Any time
At the doctor‟s
In the last 7 days
Somewhere else
25

26. 3. Mobile Internet usage on smartphones
3.5. Incentivising smartphone usage
The most common reasons for using smartphones: “to save time”, “Internet
access when other means are not available” and “when I need specific information urgently”
To what extent do you agree with the following statements.
To save time
To access the Internet when other means are not available
To obtain information that I need urgently
A fear of missing something important (for example, messages, letters
or news from friends and acquaintances)
Mobile Internet is an essential feature of modern life
The smartphone as a discrete device for Internet access at work, at
school and so on
Mobile Internet as the cheapest way of accessing the Web
Using mobile Internet on a smartphone because there is no other
means of accessing the Web at home
26

27. 3. Mobile Internet usage on smartphones
3.6. Mobile Internet advertising
90% of users notice mobile advertising when using mobile Internet from smartphones
How often do you come across advertising on the Internet or in apps on your smartphone?
Where do you encounter advertising?
In search engines
Constantly On video sites
25%
Frequently On retailers' websites
21%
Occasionally
In apps
Rarely
23%
Video advertising
Never 20%
10% Other sources
No response
27

28. 3. Mobile Internet usage on smartphones
3.7. Using a smartphone to make purchases
One fifth of all smartphone users have used their smartphone to obtain information about products when
making purchases
Question: Do you agree with the following statements?
Specifically:
Have you used your smartphone to compare
prices and search for product information
21%
Have you changed your opinion about
a product or service in a shop based on 20% Share of smartphone
the information that you received users
Have you changed your opinion about
a product or service online based on 18%
the information that you received
28

29. 3. Mobile Internet usage on smartphones
3.8. Purchases with a smartphone
23% have already made purchases* using their smartphone. Around a half of them made a purchase
with their smartphone in the last month
No Yes
No Yes
Daily Weekly
Monthly Less than once a month
• Have you ever bought anything online using a smartphone?
• Have you bought anything online with your smartphone in the last month?
*The definition of a purchase includes the purchase of paid content • How often do you make purchases online using a smartphone?
29

30. 3. Mobile Internet usage on smartphones
3.9. Reasons for using mobile Internet
The most popular reasons for using mobile Internet on smartphones: reading emails, listening to music
and viewing websites
Top-10 reasons for using mobile Internet
Email 46% 74%
Listening to music 45% 73%
Viewing websites 42% 72%
Using search engines
42% 70%
Photos and videos
40% 68%
39% 64%
Social networking sites
25% 60%
Maps and navigation
30% 60%
Games
25% 52% Any time
Visiting blogs and forums
25% 50% In the last 7 days
Reading news on press and media sites
0% 20% 40% 60% 80% 100%
 Mark all the actions that you have ever performed on your smartphone.
 Mark all the actions that you have performed on your smartphone during the last 7 days.
30

31. 3. Mobile Internet usage on smartphones
3.9.1 Simultaneous usage
While using their smartphones, owners often listen to music, watch videos and TV programmes or
browse the Internet using other devices
Which of the actions listed do you perform (using other devices)
while you are browsing the Internet on your smartphone?
Listening to music 62%
Watching videos (online and offline) 42%
Watching TV programmes (online and offline) 41%
Browsing the Internet on any 38%
other device (such as a PC)
Reading books 24%
Video games 18%
Reading newspapers and magazines 10%
Only the above actions when using 17%
my smartphone online
None of the above 2%
31

32. 3. Mobile Internet usage on smartphones
3.9.2 Reasons for using mobile Internet: search applications
40% of users use their smartphones for searching the Internet on a daily basis.
A PC is used more often for daily access to search engines
How often do you use search engines (Google, Yahoo!, Bing etc.) on your PC/Smartphone?
Daily Weekly Monthly Less than once a month
Smartphone
PC
32

33. 3. Mobile Internet usage on smartphones
3.9.3 Reasons for using mobile Internet: video applications (watching videos)
28% of users use video applications on smartphones at least once a week. For PC users the figure
is 85%
How often do you watch videos online on your smartphone (via a browser or app)?
Daily Weekly Monthly Less than once a month Never
Smartphone
PC
33

34. 3. Mobile Internet usage on smartphones
3.9.4 Reasons for using mobile Internet: Social networking sites
52% of users use their smartphone to visit social networking sites at least once a week.
How often do you visit social networking sites on your smartphone (via a browser or app)?
Daily Weekly Monthly Less than once a month Never
Smartphone
PC
34

35. 4. Technical parameters for mobile Internet usage
4.1. 3G coverage map as of 2010-2011
At the end of the first half of 2011, the share of the population living in regions covered by 3G
networks was more than 50% in the majority of Russian regions
The share of the population living in areas covered by 3G networks of mobile operators
2010
1 half 2011
70 – 97%
60 – 70%
50 – 60%
40 – 50%
0 – 40%
35

36. 4. Technical parameters for mobile Internet usage
4.2. Mobile Internet access traffic, PB
According to the forecasts of J‟son & Partners Consulting, Internet access traffic from mobile devices
will „double‟ every year over the next few years against a continually falling cost
120 8
7,1 Трафик, ПБ
Traffic, PB 104
7
100 Average cost of 1MB,1МБ, руб.
Средняя стоимость RUB
6
80
5
4,2
60 4
48
2,8
3
40
1,9
25 2
1,3
20
10 1
5
0 0
2009A 2010A 2011E 2012F 2013F
Drivers:
• An increase in the total number of smartphone users
• Development of coverage and quality of service of 3G network operators
36

37. 4. Technical parameters for mobile Internet usage
4.3. Average traffic for one subscriber, MB
As of the end of the first half of 2011, average traffic per smartphone user
was 121 MB a month
2010
over 150
100-150
50-100
25-50
0-25
1st half of 2011
Average traffic per 1 subscriber per
month, MB
2010 1st half
of 2011
On average for Russia 85 121
Moscow 89 166
St Petersburg 100 143
37

38. 4. Technical parameters for mobile Internet usage
4.4. Cost of mobile Internet
As of the end of the first half of 2011, the average cost per 1 MB of traffic for mobile Internet
smartphone users was 3 roubles
2010
More than 5
3-5
Less than 3
1st half of 2011
Average cost per 1 MB of traffic from
a smartphone, roubles
2010 1st half
of 2011
On average for Russia 4 3
Moscow 6 3
St Petersburg 2 2
38

39. 5. Forecasts, trends and barriers for mobile Internet development in Russia
5.1. Growth of sales market for smartphones and other mobile Internet access devices
According to forecasts made by J‟son & Partners Consulting, the volume of smartphone sales
in Russia will be 15 million devices per year by 2013.
Sales volume for smartphones in Russia, million items Sales volume for PC tablets in Russia, million items
15 1.23
11,8 1.02
8,6 0.74
0.4
3,9 .
1,9
2009A 2010A 2011E 2012F 2013F
Sales drivers:
• The current level of technology development facilitates
the production of inexpensive smartphones and PC tablets
• Development of coverage and quality of service of 3G network operators
• Mobile operators subsidise the purchase of smartphones and
PC tablets
• Development and rise in popularity of mobile applications that require
a “functional” telephone and Internet access
• Development of consumer credit programmes
39

40. 5. Forecasts, trends and barriers for mobile Internet development in Russia
5.2. Growth in data traffic and the mobile content market
According to forecasts made J‟son & Partners Consulting, mobile data traffic will amount to 104 PB by
2013, while the mobile content market will grow to USD 3.1 billion
Mobile data traffic, PB Mobile content market, USD billion
104 3,1
2,6
1,8
48 1,4
1,1
25
10
5
2009A 2010A 2011E 2012F 2013F 2009A 2010A 2011E 2012F 2013F
Drivers of growth in data traffic and the mobile content market:
• reduction in the cost per 1 MB of traffic, including on account of a rise in sales
of unlimited data tariffs
• development of coverage and quality of 3G operator networks and
increase in mobile Internet speeds
• increase in the total number of users and a drop in the cost of smartphones
• increase in the sales of content in app stores of mobile eco-systems
• convergence of mobile and Internet spaces
40