Samsung Galaxy Tab Sales Doubts Raised

A Samsung official has acknowledged that the Galaxy Tab isn’t selling quite as well as the company and media have initially portrayed.

Moreover, there is some evidence that the 7-inch tablets based on Google’s Android operating system are actually making a round trip from retailers to consumers, and then back.

Lee Young-hee said that the 2 million Tabs the company claimed to have shipped since last September weren’t actual sales to consumers but shipments to retailers and wireless companies such as Verizon Wireless, AT&T and others who offer the device.

Consumer Sales

The figure reflected “sell-in” numbers, Young-hee said during Samsung’s quarterly earnings call 28 January. She declined to quote the “sell-out” numbers, or sales to consumers, but described them as “quite smooth.”

The Wall Street Journal’s Digits blog captured Young-hee’s comments in a transcript:

“As you heard, our sell-in was quite aggressive and this first quarterly result was quite, you know, fourth-quarter unit [figure] was around two million. Then, in terms of sell-out, we also believe it was quite smooth. We believe, as the introduction of new device, it was required to have consumers invest in the device. So therefore, even though sell-out wasn’t as fast as we expected, we still believe sell-out was quite OK.”

While Young-hee was optimistic about the Tab’s 2011 prospects, some anecdotal evidence suggests the devices are being returned at an alarming rate.

Return Rates

AllThingsDigital noted that ITG Investment Research tracked sales data from nearly 6,000 wireless stores in the United States from the Galaxy Tab’s November debut and found return rates for the Galaxy Tab through December were about 13 percent. Tab return rates through 15 January totalled 16 percent.

The Galaxy Tab is a solid device whose chief limitation may be the fact that it is based on the Android 2.2 operating system.

Google acknowledged the Android 2.2 software is not optimised to support applications on touchscreens larger than average 4-inch screen size for most high-end Android phones. Consumers who returned the Tab may have been put off by the fact that not all applications run comfortably on the Tab’s 7-inch touchscreen.

Android Alternative

It’s likely people purchased a Tab, which now costs anywhere from $349 (£217) to $499 (£310) from carriers (originally $599/£372 from Verizon and $649/£403 from AT&T), because they wanted an Android-based alternative to Apple’s iPad, which sold some 15 million units in 2010.

Or perhaps they brought it back after word leaked in December about Motorola’s Xoom, the 10.1-inch tablet based on Android 3.0, which is optimised for tablets.

That device is launching from Verizon Wireless later this month, possibly for $799 (£496). Toshiba and LG are also releasing Android 3.0 tablets this spring.