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Revealed: Samsung misled investors, pundits with shipments vs. sales

updated 09:00 pm EDT, Fri April 11, 2014

Company relies on conflation of sales with shipments to fool Wall Street, customers

A confidential report from Samsung dug up by Apple lawyers has -- for the second time in as many trials -- revealed that the Galaxy phone maker routinely misleads both investors and the public on its actual sales to end users, at least in the US market. The discrepancy can sometimes be large, and in Samsung's case it used those misleading figures to chip away at the iPad's "marketshare" when in fact it had not made even a modest dent.

As Electronista takes pains to routinely point out, all other mobile device makers apart from Apple use "shipment" data -- most of which constitutes sales to wholesalers or resellers -- rather than sales to customers. Amazon in particular is notorious for not revealing actual sales data on any of its hardware products, which allowed pundits to speculate that the company was more successful than it actually was (it turned out that nearly all Kindles are bought during the holiday quarter only, a finding that has held up over the years).

In the previous trial, Samsung was forced to admit through court documents that it had sold to end-users less than half (see table in the gallery below) of what it claimed it had shipped. In 2011, Samsung told investors and analysts that it had shipped two million Galaxy Tab tablets in the first six weeks after the product launched.

However, what Samsung didn't reveal until now is that it took the company the whole of 2011 to sell one million of the units at retail. Because the "two million in six weeks" was the only figure revealed, a number of news sites (not this one) and pundits presumed that this was ongoing, and thus that Galaxy Tab sales were healthy enough to erode the iPad's marketshare, reports Fortune's Philip Elmer-DeWitt.

As seen in the chart above, during 2011 Apple sold some 17 million iPads is the US in 2011. The Kindle Fire sold about five million units -- less than a third of Apple's volume, but good enough for second place -- while the Galaxy Tab came in dead last among the top four tablets with one million units across the year, selling even less than the Nook e-reader (which moved 1.5 million units). The Galaxy Tab was actively promoted by Samsung and various analysts and media sites as the iPad's main competitor as a dedicated tablet (rather than e-reader/tablet hybrid like the Fire and Nook). In fact, the iPad outsold the other top three tablets combined by more than two-to-one.

Pundits, sales and investment analysts tend to conflate shipments with sales, and duly reported throughout 2011 that Android tablets had claimed up to 22 percent of of tablet "marketshare," a tale they've repeated often enough that a number of outlets have now seriously claimed that the iPad is no longer the majority seller in the US tablet field. Real-world usability studies, however, have continued to prove that this isn't the case from 2011 onwards, with the iPad continuing to account for some 87 percent of tablet web activity.

Samsung's projections for 2012 indicated that it didn't think all Android tablet sales combined would be be able to overcome the iPad -- it projected a 60-40 percent split -- and in terms of revenue it thought Apple would end up with more of a 75-25 split. At the time, it characterized its Galaxy Tab sales to investors as "quite smooth," which analysts misinterpreted as successful.

Further, US sales dropped off -- Samsung sold a mere 190,000 Galaxy tablets in the first half of that year -- but Apple had by that point sold 34 million iPads in the US since the product launched in 2010, and an average of 15 million per quarter worldwide in the first half of 2012, totalling 28.8 million worldwide as the iPad really took off. Samsung, in August of 2012, claimed it was shipping two million tablets per quarter, enough to claim 10 percent "marketshare."

Samsung's 2012 smartphone and tablet projections

It's impossible to say if other vendors are overstating their "sales" of Android tablets by more than 50 percent the way Samsung has, however the revelation is a reminder that shipments to retailers don't equal sales to end-users, and are not a reliable judge on how well a company is doing in terms of a product's popularity. That Samsung has been caught twice inflating its sales inferences on different products suggests that such deception is a standard procedure within the company.

It remains to be seen if any investor lawsuits will be forthcoming over the admission. In the meantime, news sites, investment analysts and pundits -- at the very least -- should adopt a policy of noting that shipment data from Apple competitors may not correspond to actual sales.

by MacNN Staff



  1. azrich

    Fresh-Faced Recruit

    Joined: 04-19-10

    Genie, bottle... you know how it goes.

    The downside to this trial is - we get to see how the sausage (or iSausage) is made. I wonder if these revelations will deter other tech companies from going to trial and into settlements.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    That's an excellent point, azrich -- it might well do.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Well, that's the whole point of going to court against the biggest of them.

    Samsung are the only ones worth suing, but a win against them will be a strong signal.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    Maybe, though Apple already won the first one, and in this one (due to the damages retrial) they've essentially admitted they copied the patents, now they're just hoping the jury gives them a break on the price.

  1. prl99

    Mac Enthusiast

    Joined: 03-24-09

    Information from Samsung mysteriously surfaces that says it sold far fewer devices than others say it did so now they're not liable for as much penalties by the court. Isn't that the way Samsung will twice this information into something that benefits it? That $2.2B number by Apple will shrink substantially because Samscum lawyers will say it's based on higher sales numbers than they actually sold. Of course this is a double edge sword. I hope the SEC will see this information and charge Samsung with falsifying information and penalize them an equally substantial amount.

  1. HPeet

    Fresh-Faced Recruit

    Joined: 10-04-11

    Samsung told investors and analysts that it had shipped two million Galaxy Tab tablets in the first six weeks........

    Because the "six million in two weeks".....

    Which is it?

  1. makuribu

    Fresh-Faced Recruit

    Joined: 05-26-04

    One wonders about Wall St analysts (with a long A and emphasis on the first two syllables...) who proclaim Samsung and Google and other Android copycats as winners, while they and everybody around them are reading their reports on iPads. Cognitive dissonance, anybody?

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    HPeet: thanks for catching that. That dyslexia darn!! :)

    I'll go in and fix that.

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