The amount of horse manure that corporate executives shovel tends to rise proportionately with the difficulties in their markets -- and mobile companies seem particularly intent on generating fertilizer these days.
The latest is Samsung, which had claimed in early January to have sold 2 million Galaxy Tab tablets in the product's first three months. Only, that isn't quite the case. Samsung, Microsoft (MSFT), and Research in Motion (RIMM) are examples of mobile vendors who have used artful disclosures to make their prospects look brighter.
Samsung: Sales in is different from sales outAlthough Samsung hasn't released the exact number, the company admitted during its earnings call last Friday that the 2 million represented the number of Tabs wireless companies and retailers bought. The number in consumer hands is "quite small." In retail terminology, Samsung stuffed the channel. It's an old vendor trick: place units with distributors and retailers and then claim them as sales. Companies either want to inflate quarterly numbers for earnings reports or make a product sound more more popular than it actually is. As Samsung executive Lee Young-hee put it when answering an analyst's question:
Well, your question was on sell-in and sell-out. 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 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 translation: "We got the retailers and carriers to take a whole lot of units. Too bad we don't have leverage over the customers who actually have to buy the stuff."
[Update: As was eventually reported, the initial transcripts were incorrect and the executive had actually said "quite smooth." Interestingly, though, that completely dodges the analyst's question.]
Microsoft: customer satisfaction is so much more importantMicrosoft essentially did the same thing with Windows Phone 7 during an interview with Bloomberg when senior product manager Greg Sullivan said that the company shipped 2 million copies of Windows Phone 7. Then came the giveaway:
For now, Microsoft is measuring success more in terms of customer feedback than raw sales figures, said Sullivan, who predicted sales will accelerate. He declined to give a forecast."Sales are an important measure, but for a new platform we think customer satisfaction and active developer support are more important indicators of how sales will be over the long term," he said.Instead of quoting a number of handsets actually sold, which would have shown that 2 million licenses isn't even 2 million sheets of paper, let alone that many handsets, Sullivan quoted internal supposed customer satisfaction and brand awareness numbers. How many owners did they talk to, 7? Who believes that Microsoft doesn't know exactly how many handsets are in consumer hands?
RIM: pump up the channel inventoryRIM is only better in the sense that it sells more units, so its number-bending isn't so blatant. During its earnings call in December, CFO Brian Bidulka noted that channel inventory at retailers and carriers was up year-over-year "due to timing of shipments in the quarter." It would seem normal, as you'd want inventory available for holiday sales. Only, RIM didn't need to do that the year before. It was a case of pushing units out because the company didn't want to admit that iPhones outsold BlackBerrys.
That gets us to the cipher granddaddy: Google (GOOG). Back in September 2010, Apple (AAPL) CEO Steve Jobs took a poke at Google, insinuating that Android activations included system upgrades. Google immediately snapped back that it didn't count upgrades and also didn't count Android devices without Google services, so the total copies of Android might even be higher. That leaves us a couple of questions:
- What counts as an Android activation?
- Are any activated phones in inventory, waiting for a sale to a consumer?
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