Samsung’s bullshit Galaxy pre-order numbers

Everyone is talking about Samsung’s third-generation Galaxy smartphone and the extraordinary number of pre-orders the company received for the new device. It’s bullshit.

The media is reporting that the company has already received 9 million pre-orders for the device. On the surface, that sounds impressive, but read this paragraph from the original Reuters report again.

Samsung Electronics Co has received some 9 million pre-orders for its third-generation Galaxy S smartphone from more than 100 global carriers, the Korea Economic Daily reported on Friday.

Those are orders from its global carriers, not customers. Come on people.

When Apple reports its pre-orders for a new iPhone, it uses the number of phones ordered by end users. If Apple played this type of silly game, they could add on all of the orders from AT&T, Verizon and all of its carriers from around the world. And if they did that, the number of pre-orders would still be skewed in Apple’s favor.

There is no guarantee that carriers will sell all of the Samsung phones they ordered to end users. In fact, there is no guarantee they will sell even one phone.

What happens to all of the unsold inventory? They go back to Samsung, but they still count as pre-orders.

The lesson of the day: Don’t be fooled by bullshit.



  • http://twitter.com/daanno Danijel Dercksen

    This is called provider sell-in, so yeah, the phones are actually sold by Samsung and bought by providers. So the allready add up to Samsungs gross profit. That Apple uses a totally different measurement isn’t the point here, is it? So yeah, i call you’re bullshit.

    • http://www.loopinsight.com Jim Dalrymple

      You lose.

    • http://profiles.google.com/larry.davis Larry Davis

      That’s not exactly true, those could be returned to Samsung if they don’t sell, in which case they would have to buy back.  Or there could never be another unit sold by Samsung because they stuffed the channel and there isn’t enough demand.

      The only number that truly matter is units sold to end users.

      • http://twitter.com/daanno Danijel Dercksen

        They’re nog obliged to buy them back. And as reuters points out, Samsung can’t cope with the demand so to even guess that Samsung have buy them back is bullshit..

        “The newspaper, which cited an unidentified Samsung official, also said the company’s smartphone factory in South Korea was running at its full capacity of 5 million units per month.”

        • http://twitter.com/Moeskido Moeskido

          If a smartphone is counted as “sold,” but will never be used by a consumer, will never generate voice/data contract revenue, never used to buy apps, and never used to generate Google ad traffic, does that still constitute a valid statistic for you to compare to other businesses?

          Also, is Android still winning?

          • http://twitter.com/daanno Danijel Dercksen

            You’re missing my point; Samsung has more orders than it can produce. Also all the phones they’re now making will be sold, sooner or later (for instance; the Galaxy S2 is still in allot of countries being sold to date as the top 3 phone according to GFK). So this number does say something about the initial sales numbers of the S3.

          • http://twitter.com/jonmilani Jon Milani

            Actually, you’re missing the point, and it’s very simple. Pre-orders from carriers don’t signal real consumer demand. When Samsung cites pre-orders as a representation of consumer demand it’s effectively making shit up. And that’s what is being called out.

          • http://www.johncblandii.com John C. Bland II

            Isn’t the media spinning this? Samsung merely pointed out what has happened [the event is not up for discussion, it's intent/meaning is] and the fact is 9M phones were preordered.

            Read the original reports. Credit the blogosphere for going bananas with it, which is what Jim is calling out.

          • http://twitter.com/jonmilani Jon Milani

            Samsung releases vanity metrics for a reason.

          • http://www.johncblandii.com John C. Bland II

            So Samsung spun this into 9M customer orders even though they said from carriers?

          • http://twitter.com/jonmilani Jon Milani

            To clarify: you’re giving the benefit of the doubt to a company that neither provides actual sales (or shipment) numbers, nor distinguishes between smartphones and dumbphones on its quarterly earnings reports? Right… 

          • http://www.johncblandii.com John C. Bland II

            Yes, because they have not lied about numbers to my knowledge. The shipped vs sold is a bloggers point, not a lie they tell. The say “shipments” and bloggers cry foul.

            Read for yourself. Same thing happened here. They said “carriers” and Jim posted to correct bloggers saying “users”.

        • http://profiles.google.com/larry.davis Larry Davis

          “They’re nog obliged to buy them back.”

          Are you sure?  Do you think carriers would take on all the risk?  It’s very common for vendors to buy back inventory if it doesn’t sell after some time period.

          • http://twitter.com/daanno Danijel Dercksen

            Sure, look at Apple. Apple hasn’t to but the phones back because they prove that all the phones will be soled. Looking back at the history of the Galaxy S line, i think we can conclude that Samsung has the same arrangement since the launch of the S2. Also, the S3 is being bought in by providers on a global level (Vodafone etc) instead of a local level like the S1 and S2.

          • http://profiles.google.com/larry.davis Larry Davis

            I’m not sure you understand what Jim’s point is.  Those phones may sell (and probably will eventually).  But 9 million sold to carriers isn’t the same as 9 million sold to end users.  There is a significant difference.

          • sarvin

            I was going to reply to Danijel but I think you got to the gist of the point and I don’t want to pile on. The reason we talk about pre-orders isn’t because we love randomly inflated stats and loose interpretations. We’re talking about customer’s (end-users) pre-ordering. It gives us an idea of the current consumer demand. In this case to redefine customer/consumer as the carrier (or anyone but the end-user) is either shoddy reporting or disingenuous.

            Also in reply to “Are you sure?  Do you think carriers would take on all the risk? ” it appears that Danijel isn’t actually sure if Samsung doesn’t have to buy them back or not, but it’s really besides the point.

    • mr_lizard13

      Not so. Handsets are sold on a ‘sale & return’ basis. The carriers reserve the right to return to handsets to the manufacturer – it’s in the contract of sale. This has been standard practice forever.

      Typically unit cost-prices for handsets are based on the number they order, so there is an incentive to buy up a large quantity in order to benefit from a lower cost-price (these discounts are forfeited if handsets above a certain quota are later returned, which in turn incentivises the carrier to hold onto the stock rather than return unsold units, which in turn prompts discounts for the end users in order to shift unsold stock).

      Some free advice here (which you can take or leave – your choice). It helps your credibility if you avail yourself of some facts before you post. Yes, it’s entirely possible that all of the handsets will be purchased by end users; you can make that point though without guessing (and guessing wrongly) about how the ordering process works between manufacturers and carriers.

      • http://twitter.com/daanno Danijel Dercksen

        “This has been standard practice forever.”

        Wait a moment, where did i hear this before? O yeah, it was a few months after the launch of the first iPhone and the way Apple changed the whole game :)

        • mr_lizard13

          It’s no different with Apple, they are also sold on a sale & return contract. To date however a carrier hasn’t had to make use of this clause because far from having unsold stock, the entire inventory has instead been contained as Apple struggles to keep up with both carrier & consumer demand.

      • gamburg

        Very helpful and informative reply, mr_lizard13. Thank you.  You seem to know a lot about retail business.  Do you know what happens when a customer returns a phone or tablet?  Is it a distributor who gets a hit or is it charged back to manufacture? 

        • mr_lizard13

          Whether a customer could return a device depends on the country of sale; EU countries for example have a ‘cooling off’ period for direct sales (i.e. customer orders placed over the internet or telephone) where the customer can return the unused handset without paying a restocking fee within a defined time (usually 14 days). In these cases the retailer (could be the carrier, or could be a re-seller) simply re-sells the product to another customer.

          The same would be true for brick & mortar retailers which tend to have a returns policy. If a device is sold without a contract (i.e. ‘SIM free’) then the return is subject to the store’s own returns policy, and in most countries they are not obliged to offer a full refund but many stores do so. For phones sold with a contract, again depending on the country of sale the customer may have a right to cancel the credit agreement within a set period of time following the sale, at which point the customer can return the device (a restocking fee may apply, plus deductions if the device has been used) and cancel the contract.

          In either case it’s the retailer (either the carrier or a reseller) who absorbs the costs; individual returned handsets are not sent back to the manufacturer or distributer. 

          • gamburg

            Thanks. This is true even for wholesale retailers like Costco? I was always under impression that they ship back the returns and it is the manufacturer who absorbs the return costs.

            Since returns are part of the retail P&L and Apple products usually command lower return rate, does it mean that Apple negotiates lower commission rate they have to pay to retailers as compared to Samsung, HTC, etc?

      • sarvin

        Pretty interesting stuff. Do you know where I can get more info?

    • http://www.facebook.com/people/Gturn-Turn/100002855245582 Gturn Turn

      This is also a BOGUS number because suppliers place orders for the next 6 months to a year in advance and adjust those orders as needed.  Verison might order 3 million for the next 6 months and request delivery of 200,000 per week.  They could later adjust that number down or up depending on the sales.  So Samsung reports orders of 3 million, means nothing.  Until consumers buy the phones these numbers are just wishes.

      Sprint got hounded by investors for doing this very thing by committing to order a fixed number of iPhones for Apple over several years.  Apple did not report those phones as pre-orders.

      • Skyler Crowl

        Well.. Sammy’s factories are reportedly pumping out 5 million s3′s each month (according to a number of sources) so… potentially 9 million sounds pretty okay as far as preoders go. Considering it’s 100 companies that sounds ok to me. It’s not like it’s allllll in one city or country either… Not really sure why everyone is calling it BS, it’s not like they ever said that it was 9 million customers buying the phone. They clearly said units preordered by companies. Stop getting so butt-hurt because a company expects to sell a lot. There’s obviously a lot of hype, and history shows that products with a lot of hype tend to sell well. All the same, it could be a bad business order by a lot of companies, but generally I would think that the companies are probably paying someone to make the decision for them. I also guarantee that the people making that decision for these companies is a lot more qualified than you, me, or some tech blogger.

        • Skyler Crowl

          Actually I should say they (the favorites) are currently at maximum capacity which is 5 million per month, although there’s no guarantee on how long they do that.

          • Skyler Crowl

            Well oops. Factories*

    • matthewmaurice

      I was going to specifically indicate how you were wrong, but then I realized Jim summed it up much more succinctly.

  • http://profiles.google.com/larry.davis Larry Davis

    Thanks for actually understanding the information, unlike most “news” and blog sites.

  • http://www.johncblandii.com John C. Bland II

    I think they mean the 9 million pre-orders are from users across 100 carriers. Carriers are supplied so I highly doubt they are considered a preorder.

    • http://profiles.google.com/larry.davis Larry Davis

      Why do you think that?  Why would they say pre-orders from carriers if indeed the pre-orders were from users across 100 carriers?

      • http://www.johncblandii.com John C. Bland II

        It just reads like that is possible. I don’t care either way. :-D

    • sarvin

      Is this something a person can do; pre-order a phone from a carrier?

      • http://www.johncblandii.com John C. Bland II

        Yes. That’s pretty much my point. The users pre-order the device, not the carrier. In other words, a carrier doesn’t say “Send me 2 million” if they don’t have 2M pre-orders [or close to it].

  • Jeve Stobs

    Wow.  Apple fans really don’t like competition do they?  

    • Andre B

      Well, that is kind of the point.. people want other people to be jealous of their brand new device.  If other people don’t really care because they like something different, then your own iWorth is diminished because your pride and joy is now just another device.  Same argument goes the other way as well.

    • http://twitter.com/Moeskido Moeskido

      Foolish Apple fans will exhibit the same defensive behaviors that foolish Android fans do.

      But smart Apple fans would love to see some real competition for the iPhone. That would improve the playing field for all consumers. Generalizing your criticism about an entire heterogenous group is about as impressive as any middle-schooler’s insults ever are.

      I don’t need anyone to envy my choice of hardware; I need devices that work easily, as advertised, and without my having to learn to think like an engineer or make excuses for an inconsistent UI. Let me know when the competition catches up, okay?

    • JamesKatt

      Apple loves competition.

      The problem for competition is that many observers call their bullshit what it is – bullshit.

      Samsung’s preorders are like what Samsung said about its tablets.  They have millions of sell-ins of their tablets.  But later they admit they sold hardly any tablets and that those tablets sat on the shelves of dealers.

      Sell-in is NOT equivalent to actual sales to consumers.

      • Nakshtra

        Whatever you say, man but Samsung is seem to winning the race on Global scenario except of course US. Which if you are from US then you will think it is still the centre of the world and what ever is hit in there is hit in whole world. To burst your bubble, it is not….

        • sarvin

          I know Samsung sells more handsets. I’m pretty sure Apple outsells everyone with the iPad. Do you have a reference for tablet sales globally?

        • http://www.aichon.com Brad

          It seems to me that both are winning and the rest are losing. Have you looked at the numbers? It’s hard to argue that either is losing.

          But if you’re going to argue that Samsung is winning, at least provide some facts. For instance, last quarter, Apple brought in 73% of the cell phone profits while Samsung brought in 26%.

          Source: http://www.asymco.com/2012/05/03/the-phone-market-in-2012-a-tale-of-two-disruptions/

          So, since you clearly aren’t talking about winning in terms of money, I’m guessing you must mean units sold. When it comes to those, it’s a lot closer. Samsung stopped releasing units sold numbers last year, but estimates seem to peg the two as being close last quarter, Apple being ahead the quarter prior to that (when the iPhone 4S launched), and Samsung being ahead the quarter before that one (I didn’t go back any further). The pattern that seems to be emerging is that each new iPhone puts Apple ahead in smartphone sales for 1-2 quarters, with Samsung taking the lead in the other quarters.

          Personally, I think that’s a good place for both companies to be. Arguing that one is winning when both are doing insanely well is, to me, a pointless dick-waving contest that serves no purpose.

    • Lisamacnewton

      No, they don’t like LIARS.

      • Jeve Stobs

        iPad 4G must have upset you then.

    • sarvin

      We just don’t like bogus stats. Where you really asking a question or did you mean to end with a period? I’m actually super-happy with competition. I run marathons and love the challenge. I compete with my co-workers (in a friendly fashion) to write the best code I possibly can. Competition in the market place means I get a better device. What on earth would give you the idea that we don’t like competition?

      Full disclosure; I’m what you would call an “Apple fan.” I would probably just say I’m happy with the Apple devices I’ve purchased.

      • Jeve Stobs

         No it wasn’t a question it was a statement.  Hence the “full-stop”.  Check your spelling before you check my punctuation.  It’s “were” not “where”.

        • sarvin

          Actually I was giving you the benefit of the doubt; i.e. maybe you weren’t trolling and actually asking a question. Correcting your punctuation would be obnoxious. In the future I would suggest you take your own advice. By the way you didn’t end with a period you ended with a question mark; hence my question. Please troll somewhere else.

    • Player_16

      You’re right! No company really likes competition that use unsavoury means (like channel stuffing or ‘free’) to compete. 

  • stealmyscript

    Slinging aside, I think it’s fair to say that the numbers are a useful metric, just not a useful metric to compare to Apple.

  • http://twitter.com/spreadbettingme Spread Betting 4 Me

    Either way you look at it demand for the S3 is massive – maybe because Apple’s iPhone hasn’t been updated for so long. Its not the must have right now. Face it. (OUCH!)

    • http://profiles.google.com/larry.davis Larry Davis

      “for so long”

      Less than a year is “so long”?

    • http://www.facebook.com/people/Marcus-R-Moore/676140569 Marcus R. Moore

      And isn’t the 4S still the #1 selling phone on most carriers that offer it?  Followed by the iPhone4?

      It’s not the “NEW” phone, but it’s still the most popular single phone.

    • sarvin

      Why would it hurt knowing that the 4S isn’t the “must have right now”? Do you find validation in knowing you have something someone else also wants?

    • Player_16

      Well iPhone ‘can’ be updated. How long has the 3GS been out?… Oh, sorry, I’m confusing upgraded with updated. Throw away that S2 and get that S3 since you can’t upgrade the S2. You’ll be up to date.

      (Staying with my G3)

  • wayloc4

    I would bet my life that Samsung will sell 9million S3′s to consumers. Probably within the first few months. The media are twisting words, because that’s what they do, and now Samsung seem to have the media helping them market their latest ans greatest in the same way Apple do. I love competition.

  • http://twitter.com/mabst6 Vice Versa

    You must be an Apple cruncher huh!

  • Degs62

    in the end it’s better than the I phone.

  • Guest

    The tile ‘Samsung’s bullshit Galaxy pre-order numbers ‘ and the content below is a bit misleading and biased towards Apple. The numbers are what they are, what people want to make of it is a different matter. 

  • javier Miguel-Hidalgo

    Sorry, but when has Apple ever sold direct to the customer?? They sell to O2, Vodafone, et Al.

    Just because providers are ordering massive amounts of stock doesn’t guarantee and rip roaring success but its sure as hell provides a good indication that it probably will be.

    • Enric o

      In Canada they do…. You walk in an apple store tell them what model you want and pick the provider! Done!

    • http://twitter.com/Moeskido Moeskido

      Never been in an Apple store, have you?

    • sarvin

      I’ve pre-ordered a few versions of the iPhone directly from Apple. The one’s I didn’t pre-order I purchased from an Apple store.

    • http://www.johncblandii.com John C. Bland II

      Yeah, Apple stores and Apple.com. They do. :)

    • Buckeyestar

      One sentence in and your credibility is shot. I bought my 4S directly from Apple last year, just as others have done for years.

    • Player_16

      That’s how I bought my (current) G3. What are you on about?

    • satcomer

      Um i ordered directly from Apple.com. I also bought official refurbished Macs, isn’t that direct?

  • http://www.johncblandii.com John C. Bland II

    Here we go: http://www.hankyung.com/news/app/newsview.php?aid=2012051708271&intype=1.

    Translation: “Samsung Electronics official said, “More than 290 operators from 145 countries around the world who understand that the Galaxy S3 mandaein 900 orders,” he said on the 17th. When released Galaxy S 2010 1000000 Order amount, S2 is the Galaxy last year was 3,000,000.”

    That’s a Google translation. Jim may be correct in this. The S2 did 20M so far so 9M for S3 out of the gate is a ton(!!).

  • Buckeyestar

    Wow, whole lot of butthurt Samesung fans coming to an Apple centric blog. I don’t get it. I don’t visit fandroid sites and post bitchy comments.

    • Joe

      Has it occurred to anyone that this is likely one Samsung fan posting under multiple names? I regularly read comments on this blog and seldom see so many trolls pop up all at once… might be time to stop feeding it so they’ll lose interest and go back to YouTube, the natural habitat of tween-age trolls.

  • Cloud

    Your point only gets any validity if and only if galaxy s3′s demand is not high enough to meet the production level. I believe that the s3 will outsell the s2. So, this argument about the fact that the statistic given is “pre-order” number is pointless.

  • lionelhutz1

    The Apple “fan boy” force is strong in you. You could at least admit you use an iPhone and a Macbook, you love them both, and everything else is a pile of runny dog dung. 

  • MushroomStamp

    This article is based on conjecture.Apple does not base true end-user projections either. I think the guy is in love with apple and simply distraught over the loss of his diety. He lives in a bubble ,and its foggy in there. I wish i had the power to say something repeatidly enough to make it true. SWEET! I was able to get my mind off D3 for a break

    • http://www.johncblandii.com John C. Bland II

      Show some respect. He may be incorrect but going left like this isn’t constructive.

      • MushroomStampN

        Going left??? wow, you neocon’s read politics into everything.  

        I don’t have to be constructive when someone is putting out misinformation in a public forum. Gullible people will read and take it as fact and thereby shaping sheeple uneducated perspectives.

        • http://www.johncblandii.com John C. Bland II

          I disagree with Jim [see other comments] but it is an opinion piece. You choose to come to his site and attack. Disagree all day but reading all of these unconstructive comments is a bore!

          Your comment, and many others on this post, in no way will educate someone as to how Jim is wrong.

  • http://www.facebook.com/people/Stefan-Pantea/100002221009815 Stefan Pantea

    The manufacturer takes the heat in most cases for returns at any level.  There are exceptions with small retail.  There are some mitigating factors on future orders and “used” returns. There are all kinds of clauses that deal with territory, advertisement etc.  Costco, Wallmart etc have a standard buy contract.

  • http://www.facebook.com/luca.cascianini Cascianini Luca

    I love the phone, I will be one of the 9M customers. This article is BS for sure!

  • Spencer

    They are actual pre-orders from consumers. C’mon man, you’re taking iWhoring to a whole new extreme getting mad over this.

  • Tealjay

    Well, I’m gonna help make it 9M if it’s not already. I just pre-ordered one :)

  • http://www.facebook.com/SaUrOnHacker Veljko Turudic

    IPhone shit SAMSUNG B Forver !