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Shocker: Samsung obfuscated dismal tablet sales

Shocker: Samsung obfuscated dismal tablet sales

A while back there was some confusion over Samsung's "shipped" vs. "sold" numbers for their then-new Galaxy Tab tablet. Samsung, like most companies that aren't Apple, doesn't regularly report numbers. Some "analysts" and "outlets" are more concerned with pushing an agenda or grabbing sensational headlines than figuring out the actual numbers. So, Samsung was generally credited with selling 2 million Galaxy Tabs in 6 weeks and Apple, as a result, with losing 20% share of the tablet market. Now, thanks to the ongoing Apple vs. Samsung trial, we have some real data to reflect on. Philip Elmer-DeWitt writing for Fortune:

When Strategy Analytics was telling the world that Samsung sold 2 million Galaxy Tabs in six weeks, the truth was that it took Samsung all of 2011 to sell half that many. See attached graphic.

Samsung doing everything they can to obfuscate numbers is also completely understandable. They've proven time and time again they're not out to win an ethical business of the year award. They're out to win the market. They'll copy Apple designs for their early product, they'll hire people to spam message boards, and they'll leak out highly confusing numbers to garner the headlines they want to mold the perception they need to do just that. Their job isn't to win our respect. It's to ruthlessly push their products.

It's the old business maxim of, "if you're not cheating, you're not trying." Or, the Judo Gene Labelle strategy of, "if you can't win, cheat. Hell, cheat anyway." It's the difference between losing nicely vs. winning by any means necessary.

That's why Apple executives like Tim Cook have switched from quoting market share numbers to usage share numbers — to get around the vast dark matter that is, apparently, tablets bought but not used for any measurable purpose. (Likely super-cheap video devices lumped into the category.) They're the numbers that make Apple look good.

It's up to Samsung's shareholders to demand clear, regular reporting on sales if that's something they want and think will benefit them as investors. It's up to us to demand better media coverage if that's something we value and consider important.

The "analysts" likely won't change their methods. They won't make consistent or segment anything that doesn't serve their narrative at this point, not until the industry matures enough to make them. Computers just aren't cars yet.

The "outlets" will happily report both the questionable numbers and their revelation because, another sensational headline and that's what they consider their jobs to be. Not to inform or explain but to rile up and ride on.

Also, this news coming out on the day of the Samsung Galaxy S5 is likely no coincidence either. Timing, as they say, is everything.

So we're left with this — unless and until other vendors report sold-to-customer numbers the way Apple does, most market share analysis won't hold much value.

If you're an investor, you'll need to find better sources of information to guide your decisions. If you're a customer, you'll need to decide what kind of company you want to support, and judge "the market" solely by which phones are in the hands of your friends, family, and co-workers.

Either way, let me know — do you care how many devices Samsung sells, and how much?

Source: Fortune

Updated to correct an error with "sold" vs. "shipped" that's far more nuanced. Thanks richard451!

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Shocker: Samsung obfuscated dismal tablet sales

44 Comments

They should love Samsung. Samsung has been the first as of recent to put up sales anywhere near Apple sales in mobile. That competition is something Apple cannot ignore and in result the consumer is probably getting a better device no matter what side of the fence they are on.

ಠ益ಠ

Lol, for shame. I can already hear Jim Dalrymple's laughter.

How does this company keep putting themselves in this position? And why doesn't the media latch onto this repeat offender and stick it to them like they do Apple?

The media are scoundrels. They build up only to turn around and tear down what they were building up yesterday. Facts are no longer relevant to many "journalists".

That's part of my question though, they (media in general) have been seemingly building up Samsung the last couple years, at what point do they begin to tear them down in the (link bait-ish/doomed) way that many feel they have done to Apple?
(When Samsung's marketing campaign rests on its laurels?)

Well BusinessWeek made an attempt yesterday, taking a wee-wee on Samsung's Launch Day Parade. "Samsung's War at Home"

Edit: anyone interested will have to search, no URLs allowed here.

I can see Samsung lying their collective rear ends off but looks like the news outlets would get fed up with being so manipulated. I don't understand why those same news outlets feel the need to try to tear down Apple and be used as a pawn.
I really don't care how well Samsung does but I do care about the manipulation and how those same outlets will react to the news of being "had".

Because taring down a top dog gets better headlines ... these days ethical is a rare thing... and trust even more rare.. I trust no-one from any news agency.. Its all a reality show to many of them.

These numbers do matter in many ways. We also have at least 7 examples of the lack of integrity of Samsung. These numbers do matter to investors, because a high degree of influence in the valuation applied to a stock is 'sentiment' - some call the P/E ratio a 'Investor Sentiment measure' as the ratio determines sentiment or 'belief' in the future of a company. When Apple's number look worse, or Samsung's better, and when that is multiplied by talking heads on CNBC, print, or the blogosphere it untruth actually multiple instead of being discovered. It's also strange how such a story about Apple would drive outrage, while this story about Samsung will quickly die down to a distant memory.

I have no doubt that Samsung sees business as war, and they will do anything to win. Part of me even understands that as simply working with the system we live in. Others will do it to them, so why not be the best and using the game that truly exists?

The real horror from this story isn't Samsung, or the media were I expect this -- it's the "independent industry research firms" like Gartner and IDC. Most people expect that they should be trustable. I know for a fact that while think payola might be going too far, they will follows tracks that will generate them future profits. I was recently on online conference with Gartner and it was quite clear that they weren't willing to compare value or real world usage in their presentation and were happy to make iOS sound like a dying platform. These were the people you'd expect to go on level deeper and add the required context -- nope!

My other long standing beef is that research and analysis firm seem very willing to put generous speculated numbers vs. Apple reported numbers. If other companies don't report, shouldn't they apply extra conservatism to any estimate of their sales? If so, this would encourage these companies to come forward. Now, why should they when better numbers get reported when they hide the actual figures?

One correction Rene, Apple does NOT purely report "sales" (i.e. devices in the hands of customers). When ownership of a device transfers to a retail or carrier Apple reports that as a sale. This is why there is a difference between "sell-in" and "sell-thru" and why ending inventories are important. Again, only Apple reports these numbers. The company everyone thinks as being so secretive, is actually the most transparent when it comes to financial reporting.

"Apple reports "sold" numbers." ugh. The meme really needs to die as it's nothing but ignroance. Here is a great link to educate iMore readers (and hopefully the author):

http://gigaom.com/2013/05/09/what-apple-really-means-when-it-says-it-has...

In the words of financial analyst Horace Dediu: “Apple’s reports show shipments not sales. All vendors as far as I know report shipment data since that is what they can record.”. Apple has no way (short of their own retail stores) to know if a product has been purchased or not.

Here is what Apple themselves say on when they consider a product to be sold: "For most of the Company’s product sales, these criteria are met at the time the product is shipped."

Yet, APPL pundits like to think Apple has magic and know exactly when a user walks into Sams Big Box electronics and buys an iPod Shuffle ("it has a secret transmitter that is activated when happiness is about to happen")

you could make a strong argument that Apple items don't stay on the shelf very long, so shipped really does means sold, but as Dediu points out, that is the norm in the industry (not always as when it does happen, you see fire sales/inventory write offs, ala touchpad, blackerry everything, surface, etc..).

As for Samsung. The original report stated Samsung shipped 2 million worldwide Galaxy Tabs for Q1/11. According to the court documents, it showed Samsung sold a measly 141k in the US for Q1/11. The document also shows that Apple sold 2.8m iPads in Q1/11 and we know that Apple reported 7.3m in Q1/11. Does that mean Apple was also lying about Tablet sales? (odd that headline isn't anywhere) I don't think anyone is surprised that Galaxy Tab US sales sucked in 2011.

To me, the better story is that the Kindle Fire was very close for sales with the iPad in Q4/2011.

Amazon doesn't report anything. I'm sure the clueless analysts chimed in on something regarding it. I'm still blown away by that chart. I would have never guessed Kindle Fire sales were close to the iPad.

This is also a good comeback for those who claim Apple fights in court when it can't compete in the market. Clearly (in 2011) Amazon is a much bigger threat than Samsung. If Apple truly used the courts as a sales tool, then Amazon would also be in court.

The analysts are not clueless. They are deliberately misreporting facts.
Kindle Fire sales are a fraction of iPad sales.
You will never see this reported on Android Central by the way.

The 5 million figure seems to have pretty wide acceptance as being the 'size of their first run'. Note that the graph puts them in one quarter, while in fact that was spread across many. Horace interpolated that number from Amazon's statement of market share and I can't recall, I believe there were other supporting statements as well.

Note that the 5 million figure was 'baked in' for Amazon, that's how many they made, and that is how many would sell. They reduced prices at the end to finish out the inventory to prepare for the Fire 2. Amazon is extremely tight lipped on data, but for them it doesn't really matter. The devices were priced cheaply (many believe at a loss) and their prime purpose is to move Amazon content and provide a window into their sales stream. By pre-ordering a consignment of 5 million, knowing they would sell them somehow at whatever price required, allowed them to get good volume pricing on components and assembly. A company in a similar situation but relying on hardware profits could not do this (or would take a large risk doing, for example the large write-downs that Microsoft had to swallow with the Surface or RIM with the Playbook). Samsung is a little unique here because they are making their living selling hardware but by tying that to their manufacturing heft and capabilities. This is a great advantage when it comes to internal pricing and responding quickly and efficiently to market conditions.

Apologies for my snarky response as it reads like I hate you :(

I do agree with your overall sentiment regarding Samsungs unethical behavior.

Richard, you have that "sales" issue correct, glad we can agree on that. There is still a difference between units 'in the channel' vs 'in the hands of customers'. Also note, that sales via Apple retail and online stores are actually reported as 'in the hands of customer' as to ownership is not transferred until it is a real customer.

Apple reports, "sell-in", but DOES give the numbers to compute "sell-thru" (sell-in minus the delta between this quarter's ending inventory and last quarter's ending inventory). Note that most other companies do not offer anywhere near this amount of transparency. My point is, why should they, when the press and analyst firms give them "rosier" numbers that way than in reality?

However, I'd like to adjust your reference in Apple sales numbers in the 2nd last paragraph. The document you are looking at for the figures is Samsung's document, and you need to also adjust fiscal quarters vs calendar quarters. The 7.3M you reference is actually calendar 4th quarter (CQ4=FQ1 for Apple) of 2010 (and the holiday season) which did report that number.

My model shows at reported figure from Apple as 4.69M for the calendar Q1 and an ending inventory of 850,000 units. We don't have a true ending inventory for the previous quarter (early in iPad reporting) though we know it was an increase by 525,000 units. If we use that number, we get a sell-thru (i.e. actually in the hands of customers) of 4.3M. This still differs from the SAMSUNG graph and that perhaps is a better issue to again chase Samsung for (as putting the books in the oven is not exactly out of character for them).

So, to your 'does that mean Apple is lying about tablet sales', the answer is NO, Apple publishes all the numbers and in a forum (financial reports) that means they have fiduciary duty to have them correct and accurate unless they want an investor lawsuit like you wouldn't believe. Also, the 2.8M is a Samsung figure in a Samsung document. Are they lying? Well, I'll let you make your own judgement of company character on that one.

You misread what they said. By far the vast majority of Apple sales are known down to the individual level. None of Samsung's reported numbers are based on that.

I don't give a shit about sales. I care about how the product suits my needs. I recently was choosing between an iPad, Note 10.1, and Surface Pro. The surface pro suited my needs the best. The last thing that weighs in on my purchase is how well the product is selling.

ಠ益ಠ

You as an individual, sure. But as a whole, sales influence other sales. Why? Consumer 'sentiment' matters, people do like buying what others are buying in general. While that sounds purely emotion (which is true, but still real), there are real reasons too. What kind of press will you get and do you establish a 'fan base' who will support the product? Will there be good support from the company and in online communities? Will a variety of add-ons and peripherals be available? Will the product die out and not have upgrades available (e.g. Playbook, Palm TouchPad). If you are a seller, how much shelf space and indoor sales material will you allocate and how much inventory will you order? All of this feeds a virtuous cycle where sales actually do beget sales.

On the finance side, sales figures are obviously key both from the investor and company side. A falling stock can pressure and influence a companies actions, and a lack of sales could lead to a product being get less internal investment, or even getting cancelled outright.

That's greet and all, but when it comes to sales one giant piece of the mobile market is watching and that is the developers of great apps and let's fave it your product is only as good as the apps that run on it (at least in the smartphone/tablet market). The Surface Pro is a great tablet and suits a need for many people, and I wanted one, but it has an identity crisis (as all Microsoft products seem to have). I don't need a tablet/PC especially when the Surface Pro is a horribly gaudy tablet and isn't even close to a good PC.

Like I said for some it is great, but from the amount of time I've spent with the Surface Pro (appx 10 good days of use) it isn't a great product. I would rather still carry my rMBP and iPad Air as they are both greatest what they do and don't pretend to be what they aren't. I don't use my tablet like a PC nor do I wish it had PC like features. In the same sense I don't need to be running applications designed for a mouse and keyboard and shoved into touch. They just don't work well and never will.

Samsung unethical? Say it ain't so! Seriously, I learned that buying a Samsung TV that was broken on arrival. I called the number in the box to get a warranty repair, and they refused to honor their warranty. Fortunately, Amazon isn't a sleazy company like Samsung, so they took the TV back and replaced it with a real TV (Sony). Never Samsung again for me!

I'd have forgiven a lemon, anyone could have one of those, but I cannot forgive a company so sleazy as to not honor their warranty on the lemon. Besides, while more expensive, the Sony Bravia is so far superior that it did work out for me in the end (thanks to Amazon).

A more expensive product is superior... You don't say?

I have a 40 in Samsung for the bedroom and a 65in smart Vizio in the living room. The Samsung is great and it lasted years but I opted cheap but bigger this time around and I am very happy with my choice.

ಠ益ಠ

Well, sure, I never implied otherwise. Nevertheless, maybe Samsung is #1 because they are cheaper not better? Just hope you don't get a lemon, though because they come "as-is."

Not really concerned with how many they sell. It is usually a matter of your needs, and will the product fit the needs. Off subject of the tablets, Rene you gave us a good word for the day. Obfuscated. You have been in the dictionary again.

I wonder how the boys over at Cnet and other 'tech' sites with their army of Apple haters spinning this one. Competition is good but when did Samsung garner all this anti-Apple drivel in favor of their exaggerated sales numbers. And when you point out that market share numbers vs. real sales revenue shows that Apple is the one taking cash to the bank it just doesn't seem to register with the Samsung/Android devotees.

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Sales numbers have no impact on which tablet/phone I choose. The Samsung tablets I've seen at stores always seem to have nice displays but that's about it. They don't seem to have any coherent products on the tablet side. By this I mean that there seems to be just multiple options for no apparent reason. Having said that I am looking forward to either a 4.7 or 5.5 inch iPhone to choose from and I believe this is only happening because of the big screen phones that Samsung and the like offer. I bought the iPad mini and then sold it because the iPhone 5s and it's awesomeness made it unnecessary to own both. Curious to see what happens to iPad mini sales with the bigger phone offerings (if the 5.5 phablet iPhone is real) on the way.

Did anyone think these actually sold? I thought it was known the tablets didn't sell well at first for them

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