Samsung Galaxy Tab Shipped 2M Units but Not to Consumers

Samsung shipped 2 million Galaxy Tab tablets as alternatives to Apple's iPad, but not all of them went to consumers. Moreover, consumers are returning the devices.

Samsung's Galaxy Tab isn't selling quite as well as the company and media have initially portrayed, a company official acknowledged.

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

The figure reflected "sell-in" numbers, Young-hee said during Samsung's quarterly earnings call Jan. 28. 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.

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 Jan. 15 totaled 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 optimized 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.

It's likely people purchased a Tab, which now costs anywhere from $349 to $499 from carriers (originally $599 from Verizon and $649 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 optimized for tablets.

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