No, Galaxy Gear could still be massive flop

CNET takes a look at why 800,000 units over two months isn't as impressive as it first seemed.

The Galaxy Gear watch in action. Brian Bennett/CNET

The Galaxy Gear recorded 800,000 unit sales over its first two months -- so it's a hit, right?

Not exactly. The figure Samsung disclosed is actually the number of smartwatches the Korean tech giant shipped to retailers and partners; it isn't actually a true reflection of consumer demand. Korean publication Yonhap reported that the numbers represented shipments, and not sales to consumers, and the Verge confirmed the report.

A Samsung representative later confirmed to CNET that the number represented shipments, and not sales rung up to customers.

Samsung released the shipment numbers to Reuters earlier on Tuesday, likely as a bit of damage control. Korean news site BusinessKorea reported that the Galaxy Gear has recorded sales of only 50,000, with daily sales of 800 to 900 units. Samsung hasn't disclosed any direct sales numbers, but if its performance is anywhere close to BusinessKorea's figure, it would be considered a flop.

"50,000 is a rounding error in device sales," said Maribel Lopez, an analyst at Lopez Research.

That the Galaxy Gear could be facing trouble in the market shouldn't come as a big surprise. The Gear was almost universally panned when it first came out. Critics knocked its limited capabilities, low battery life, and sole initial compatibility with the Galaxy Note 3. In his review, CNET UK editor Andrew Hoyle said it "falls well short of expectations."

To be fair to Samsung, the company typically releases shipment numbers, as is the norm in the handset industry. The company doesn't sell directly to consumers, instead it relies on its channel of retailers and carrier partners. That, however, doesn't guarantee success in the consumer marketplace.

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It wasn't until recent years that Samsung even disclosed actual sales to consumers, known in the industry as sell-through numbers. (Sales to retailers are known as sell-in numbers.) On select occasion, Samsung has disclosed sell-through numbers of devices, like the Galaxy Note, in an effort to quell doubt about its demand.

This time around, however, Samsung is promoting the more impressive-sounding shipment number. It may have backfired, with many news sites and blogs jumping on the tactic as simple corporate spin.

The initial negativity likely won't slow Samsung down from moving on with a next-generation Galaxy Gear, and a Gear after that. The company has indicated it wouldn't give up on the market for smartwatches any time soon.

"It's a new category and it's unproven," Lopez said. "We won't really know until they are on Gen 2 or 3 if it will fly."

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About the author

Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.

 

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