Apple 2.0

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Samsung on the run

September 4, 2011: 6:27 AM ET

The world's No. 1 maker of Android devices is feeling the heat on two fronts

Hasty cover-up at Samsung's Berlin booth. Source: AndroidPit

Samsung suffered a pair of setbacks last week, although whether they are substantive or superficial remains to be seen. One called into question its impressive sales figures, the other its legal right to sell devices that bear such a striking resemblance to Apple's (AAPL) iPhones and iPads.

  • Shipments vs. Sales. Samsung made headlines last year when it announced in December that it had shipped 1 million units of its 7-inch Galaxy Tab -- a figure that Steve Jobs publicly challenged, joking that most of those 1 million Tabs were probably still sitting on the shelf. Jobs may have struck closer to home than he realized, if a report in Friday's Guardian is to be believed. According to Andrew Barrow, an executive at Lenovo, Samsung sold only 20,000 Galaxy Tabs in 2010 -- just 2% of the 1 million it shipped. That's an astonishing low number that 's getting a lot of play in the tech press. But it cannot be considered definitive because it comes from one of Samsung fiercest competitors.
  • Patent wars. FOSS Patents' Florian Mueller reported Saturday that on the second day of a major electronics trade show in Berlin Samsung was forced to remove from its booth both its new 7.7-inch Galaxy Tabs and the promotional material that accompanied them. It even scraped off the product's name where it appeared below the samples. The incident -- which played out in front of tech journalists from around the world -- stemmed from one of the many patent suits Apple has filed against Samsung, accusing it of "slavishly" copying Apple's intellectual property. Last month a regional court in Dusseldorf issued a preliminary ruling in Apple's favor, banning the sale of the 10-inch Galaxy Tab in Europe. According to Mueller, the court has issued a second injunction extending the ban to cover the new 7.7-inch model.

Samsung may yet prevail -- or reach a settlement -- in its court battles with Apple. And it may yet release credible sales figures that distinguish between shipments to distributors and sales to customers. Until then, its PR representatives are in a tough spot. Below: Mueller's translation of a video interview AndroidPit's Fabien Roehlinger conducted with the press spokeswoman of Samsung's German subsidiary.

AndroidPit: People saw that you removed all Galaxy Tabs 7.7 and covered [parts of the tables] with a sheet. What's the matter with this?

Samsung: We have decided -- on a current occasion -- to replace the product with our other IFA highlight product, the Galaxy Note, since, as the press reported, we weren't going to offer the product for sale in Germany anyway, so we want to show our customers the other product -- the [Galaxy] Note -- more closely.

AndroidPit: Does this have to do with Apple by any chance?

Samsung: On this one I have to ask you for your understanding that I'm not allowed to comment on an ongoing [legal] proceeding.

AndroidPit: So this apparently means you want to focus more on the Galaxy Note and you have therefore taken a decision on short notice to rearrange your exhibits?

Samsung: The Note was going to be our highlight product anyway and since the other product wasn't going to be sold in Germany at any rate, I believe it's also better for the consumers here [at the show] and simpler and in the interest of trade show visitors that we really show only those products that are really going to be released in Germany.

Mueller points out that Karstadt managed to get through the Q&A without ever uttering the words "Galaxy Tab 7.7," referring to it instead as "the product" or "the other product." It's not easy doing business in a country where your product has been banned.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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