A research report on Monday showed that tablet PCs running on Google’s (NASDAQ:GOOG) Android software are already cutting into Apple’s (NASDAQ:AAPL) iPad market share.
Strategy Analytics said the iPad’s fourth-quarter market share fell to 75% from 96% in the third quarter, while Android tablets jumped to 22% from 2.3%. The gain was attributed to the popularity of Samsung’s Galaxy Tab.
Promising statistics for Android, but potentially misleading. As All Things Digital noted on Monday, Samsung’s senior president of mobile communications Lee Young-hee said during the company’s last earnings call that though the Galaxy Tab was selling well to retailers, it wasn’t exactly a hit with consumers. She described the device’s sell-out rate (how many tablets make it to consumers) as “smooth,” but the 2 million tablets moved to retailers during the device’s first two months haven’t all reached consumers.
More troubling, however, is word that the Galaxy Tabs bought by tablet-hungry customers don’t stay in their possession for very long.
Speaking to the New York Post, an analyst with ITG Investment Research said that, between the device’s release last October and Jan. 15, U.S. customers have returned 16% of them.
ITG’s results are based on point-of-sale data compiled from 6,000 wireless stores across the country. Worse still, the rate has grown in just the past month — Galaxy Tab return rates were at 13% as of the end of December, meaning that Samsung lost a significant portion of holiday sales to returns.
Is the country’s obsession with tablets already turning around fueled by buyer’s remorse and disinterest in the technology? Hardly — ITG found that just 2% of Apple iPads are returned to retailers.
The question then is what does Samsung’s troubled foray into the fledgling tablet market signal to competitors entering the market later this year? Will major new Android-based tablets like Motorola’s (NYSE:MMI) Xoom and Vizio’s Via Tablet show initial big sales next quarter only to be rebuffed by regretful early adopters? What will happen to Research In Motion’s (NASDAQ:RIMM) great 7-inch hope, the BlackBerry PlayBook, the device on which the company is pinning its hopes in both the consumer and business markets?
It’s impossible to judge the future success of devices like the Motorola Xoom by that of Samsung’s Galaxy Tab. Google stressed repeatedly last year that its Android 2.3 Froyo software wasn’t meant for tablets and, as such, would likely translate to a subpar product. Galaxy Tab owners are likely returning their tablets because there simply isn’t enough unique software support to make the tablet functional or entertaining enough to keep paying a data plan.
Devices running Android 3.0 Honeycomb, set to be unveiled on Wednesday, should fare better. Non-Android tablets like RIM’s PlayBook, meanwhile, need to take Samsung’s lesson to heart: If your product doesn’t match Apple’s for style and functionality, price won’t matter. Being cheaper clearly hasn’t helped the Galaxy Tab.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
