IDC's Q2 Samsung Estimates Likely Extremely Exaggerated

As soon as I saw the court documents showing sales figures for 24 of Samsung's 33 US smartphone models and saw that Samsung's best quarters hovered around 3M units in total for all these models I became extremely suspect of the report from IDC last quarter that estimated that Samsung sold a record-smashing 50.2M smartphone units in that quarter.


Top Five Smartphone Vendors, Shipments, and Market Share, Q2 2012 (Units in Millions)

Vendor

2Q12 Unit Shipments

2Q12 Market Share

2Q11 Unit Shipments

2Q11 Market Share

Year-over-year Change

Samsung

50.2

32.6%

18.4

17.0%

172.8%

Apple

26.0

16.9%

20.4

18.8%

27.5%

Nokia

10.2

6.6%

16.7

15.4%

-38.9%

HTC

8.8

5.7%

11.6

10.7%

-24.1%

ZTE

8.0

5.2%

2.0

1.8%

300.0%

Others

50.7

32.9%

39.2

36.2%

29.3%

Total

153.9

100.0%

108.3

100.0%

42.1%

As you can see, their rather bullish estimate on Samsung (which many took as fact) shows a 172% increase in smartphone sales. However, we can now see that 24 of Samsung's 33 models over the past 2 years have captured 3M or less units in the USA. For comparison, Apple sold 26M units of iPhone worldwide last quarter and about 8M in the USA. Their multiple of worldwide to USA is about 3.2x. To be fair, Apple does better in the USA than they do abroad with regard to market share, but we can make some assumptions here....

1) Samsung's 24 of 33 smartphone models (including the GS2) represent 40% of all sales in the USA in Q2.

2) From the court documents we see that Samsung sold about 2M units of the 24 models mentioned, so we can extrapolate to 5M units in total using our 40% number.

3) Assume Samsung's multiple of worldwide to USA is about 7 (more than twice that of Apple's) -- which is very generous given the state of the European economies in Q2.

Even being that optimistic we only end up with 35M units of smartphones worldwide. No where near the 50.2M units touted by IDC in their analysis. I would say that 35M units is extremely optimistic and that it is quite possible the real number could have been in the range of 22M to 35M units. We will never know because Samsung won't give us the numbers for the other smartphones and for all regions.

However, Samsung has given us the numbers for their tablet sales. Fortune specifically calls out IDC's report in an article published today. They point out that IDC's report claims a 117% increase in Q2 tablet sales for Samsung year-over-year. In total, they estimate 2.4M tablet units sold. From the actual numbers we see from Samsung, we can see that Samsung only sold 37,000 units in the USA which represented an 86% decline year-over-year from 2011 sales in the USA. If Samsung sold 2.4M units then 98.5% of those tablet sales would have had to come from outside the USA. This is especially unlikely in a quarter when sales in Europe were way down due to economic problems faced by many countries.

All in all, these recent reports from the court seem to indicate something I have been saying for a long time. You cannot take analyst reports as facts -- they are opinions. People parrot these reports constantly and even the most bullish of analyst estimates on Apple are off by almost 50%. There is certainly a strategic reason that Samsung stopped reporting smartphone sales figures in their quarterly reports. When you don't break something out it is because you would prefer to hide it. It is rare for anybody to hide a record-smashing quarter from their investors. I'm sure Samsung has enjoyed these bullish estimates on their smartphone sales for last 18 months or so, but the actuals are probably not nearly as pretty as IDC would have us believe.

The really bad part about this is that it is not just an analyst being wrong, but Samsung misleading its investors. According to Fortune:

In early December 2010, dozens of reporters happily repeated Samsung's claim that it had sold 1 million Galaxy Tab computers in the three and a half weeks since the tablet's November 2010 U.S. debut. Seven weeks later Samsung was telling analysts that Tab sales had passed 2 million.

It's hard to reconcile those numbers with court documents Samsung filed Thursday in a California federal court that show the company selling 262,000 Galaxy Tabs in the U.S. -- the world's largest tablet market -- in Q4 2010 and 77,000 in Q1 2011.

I can call IDC a bunch of idiots for getting their estimates wrong, but given the claims that Samsung was making on the tablet side, that is not nothing short of misleading the public and their investors. People keep coming to the defense of Samsung and keep harping on what an evil company Apple is. If you take this kind of stuff into account its kinda hard to trust anything Samsung says.