Samsung Backtracks On Tablet Sales, iPad Loses Share - InformationWeek

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1/31/2011
03:25 PM
Eric Ogren
Eric Ogren
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Samsung Backtracks On Tablet Sales, iPad Loses Share

When pressed for answers, a Samsung executive admitted that the number of consumers who've actually purchased the Galaxy Tab is "quite small."

When pressed for answers, a Samsung executive admitted that the number of consumers who've actually purchased the Galaxy Tab is "quite small."Samsung's management has been crowing about the success of its Galaxy Tab Android tablet. The company said in early December that it had shipped one million units, and just last week said it had reached two million. Turns out those numbers represent what Samsung sent to retailers, not what retailers sold to consumers.

During Samsung's recently quarterly earnings call, executive Lee Young-hee said, "As you heard, our sell-in [shipments to retailers] was quite aggressive and this first quarterly result was ... around two million. Then, in terms of sell-out [sales by retailers to consumers], we also believe it was quite small. 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."

In other words, two million people have not purchased the Galaxy Tab. This helps, then, to explain the aggressive price reductions by U.S. carriers for the Tab. The Tab started out at $400 on contract (or $600 at full retail), and has dropped to $250 already from some U.S. carriers. Apple's iPad pricing remains the same as it did when announced a year ago, $499 for the entry-level model.

Speaking of the iPad, the rise of Android tablets sunk its teeth deep into the iPad's share of the tablet market during the fourth quarter of 2010.

On the whole, the tablet market grew from 4.4 million units in the third quarter to 9.7 million in the fourth. Apple had a 96% share of the tablet market during the third quarter. By the fourth, its market share dropped to 75% due to the entrance of Android-based tablets.

Apple will only continue to lose tablet market share to competitive platforms. When you enter a market with nearly 100% grip on it, there's no way to go but down -- even if the competition stinks. Any competition at all will take numbers from Apple. Android was the first platform to do so. Soon, webOS and PlayBook OS will steal market share from Apple, too.

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