Shame that Microsoft and Tech Press doesn't know what a "sale" is

If you look at Techmeme right now you’ll see a lot about Microsoft pushing a story that their Windows Phone 7 system is selling well. I saw lots of headlines to that effect, a few that are still on Techmeme.

One little problem, the thing they are counting isn’t sales at all.

Here, let me pull out my book contract with Wiley. I only got paid for a sale. A real sale. You know, when a customer walks into a store, picks up my book, brings it to the checkout counter, and actually turns over some cash for it. (Or does the virtual equivilent online).

Note: they did NOT pay me for all those copies sitting in Amazon’s warehouse.

When I helped run a retail store in Silicon Valley back in the 1980s, we all knew what a “sale” was. It was when it actually got sold and walked out the door. I was paid on commission back then. That’s the only time I ever got paid. I never got paid for ordering 1,000 Canons that sat in the warehouse. In fact, if they sat there for very long I would get fired if I made too many buying mistakes.

So, how many Windows Phone 7s have Microsoft sold? No one knows, but based on discussions with developers who are tracking usage it is no where near 1.5 million.

I’m ashamed that the tech press buys into these “stuffing the channel” stories. That’s the kind of dreck we used to see reported back before blogs but now that the pressure is on to publish first we forget to think about the press reports we’re being fed.

Sigh.

Comments

  1. Agree. I guess I heard several people saying the same thing. Microsoft is pushing numbers they sold to retailers and manufacturers and not the actual device sales to consumers.

    I wouldn’t expect them to sell 1.5 in 2 months, nada, they still have a lot of catch up to do.

  2. OEM’s buy licenses from Microsoft so technically it is a sale for MS. The consumer sales will come from the carriers if I am not mistaken

    1. I disagree. Microsoft knows that if these copies just sit in a warehouse somewhere they don’t count as sales and they probably will even have to give refunds to OEMs if that’s the case. Second, that doesn’t exclude the tech press for bad headlines that made these “sales” seem more important than they were.

      1. Do they? Last I checked Microsoft only sells OS’s to OEM’s for mobile. OEM’s then take orders from Carriers who then actually sell the devices.

        The only numbers Microsoft can account for is the OS licenses. Maybe you have some insider info into MS selling devices these themselves but as far as this outsider knows that is not the case.

      2. Since when does Microsoft give refunds for unused licenses? According to Canalys 2.6 million Windows MOBILE handsets to sold quarter. Are they rotting in warehouses also?

      3. There’s no basis in your argument though.

        1) Microsoft may or may not have internal numbers from OEMs/carriers, but this data generally isn’t released until the OEM/carrier handles its monthly/quarterly reports. For example, HTC generally releases sales quarterly, about 3-4 weeks after a quarter ends, so a REAL number of their sales, people will have to sit tight until near the end of January. Microsoft hasn’t done this with their past mobile OS, there’s no reason to expect them to change this for the edification of a generally passive-aggressively hostile tech press.

        2) a license sold to an OEM is a license sold, because the OEM is selling it through to the carrier. If a carrier over orders, it’s their loss unless they reach some agreement with an OEM, but there’s no evidence that MS has reimbursed OEMs for unsold phones (using the older Windows Mobile as an example). Carriers are pretty cautious on keeping stock low, and it would be a fair estimate to say that somewhere about 65-70% of the devices have sold through, based on the date of the original press release, and ordering cycles, combined with the low stock of many devices in the North American launch.

        3) The original release, and most of the headlines I read were pretty clear on the fact that MS was talking about sales to manufacturers, not end customers (which they can’t do because of point 1).

  3. Sad, really, to see Microsoft still doing this kind of stuff just when they have a potentially interesting product.Old habits die hard, I guess, just like old corporate dinosaurs…

  4. I cant understand your taking issue with Microsoft here. The press release clearly spells out what they are referring to, This is the para that refers to 1.5 million sales

    “Another is phone manufacturer sales – phones being bought and stocked by mobile operators and retailers on their way to customers. We are pleased that phone manufacturers sold over 1.5 million phones in the first six weeks, which helps build customer momentum and retail presence.”

    How is MS being deceptive here?

    1. Clearly laid out? “We are please that phone manufactures sold over 1.5 million phones” It’s not a lie but it is purposely stated to be ambiguous to the general public.

      You might understand the supply chain here and said to yourself, “well that doesn’t mean anything about adoption at all” but most people would read that as it is stated and it states 1.5 million phones were sold.

      1. First I dont think most people would read a Microsoft Press Release. Anyone who does should at least read the full thing, its not like its a 50 page essay or anything, its about 6 paragraphs. Anyone who reads the thing and has basic reading comprehension skills should get what it says.

  5. Yeah, I have to agree with other commentators, it isn’t Microsoft’s fault at all. All of it is laid at the feet of the tech press, and even then, if you read the quality sources they’re still saying these are channel purchases and not consumer sales.

    Secondly, if a store or carrier has bought devices from Microsoft, then Microsoft’s made a sale – if you bought 1000 Canons from Canon, then Canon made 1000 sales (unless of course they’re running sale-or-return, which for tech would be silly).

    1. Not really.
      As I wrote on my site (before this post fwiw), this is reflective of Microsoft’s unwillingness to fight for the *future* of personal computing. These numbers mask a fundamental weakness within the organization.

      Even using your assumptions that Microsoft still gets the (measly) licensing dollars from each of these “sales”, the fact that there’s probably 1 million WP7s sitting on store shelves and warehouses reveals that the manufacturers won’t be placing many more orders for these. If people aren’t buying them, manufacturers won’t keep making them.

      For those interested: (bad language alert if that matters to you)

      http://brianshall.com/content/thats-right-microsoft-youre-bunch-pussies-goes-double-you-ballmer

      1. Does Microsoft have detailed sales numbers from all the manufacturers of devices for the platform? It probably does, but does it have the right to release those numbers? Probably not.

        The only smartphone platform vendors who can legitimately talk about “proper” sales figures are Apple, Palm and Nokia as they control their entire chain. Plus, how do we know they’re all sat in warehouses? They might have sold a whole bunch of them and people just aren’t buying WP7 apps – the only real metric we can go with, or be in countries where there isn’t a localised developer community.

        Microsoft is right to say that there are 1.5m phones out there with WP7 on. They’re not trying to pass that off as good or bad, just a number that some shareholders might be interested in.

        1. “some shareholders are interested in.”???

          Seriously?! Try all shareholders are interested in! They’d be in the red right now if this artificial number didn’t surface.

          Microsoft’s 1.5 M Phone Stockpile – http://goo.gl/6EujU

  6. To some extent, Microsoft’s position will depend on their agreement with manufacturers. It may be that Microsoft benefits from handsets produced regardless of when (or if) they’re sold, in which case Microsoft’s story is legitimate. However, it can be ignored by anyone other than those directly affected by Microsoft’s bottom line. What will matter to consumers (and developers) is the adoption rate.

  7. The 14 million iPhones that Apple claims it sold should be investigated more closely, give that when Steve Jobs opens his mouth, lies come out

  8. Well… for what t’s worth, PC Mag got it right: http://www.pcworld.com/article/214371/

    “In other words, Windows Phone 7 manufacturers have sold more than 1.5 million devices to retailers and wireless carriers, not customers. So it’s not clear how many people have actually plunked down hard-earned cash for a piece of Windows Phone 7 magic.”

  9. Robert – in 1994 MSFT ran over Borland, WordPerfect, Software Publishing and Lotus with a new product (office) on a new platform (windows 3.1). 16 years later the shoe is on the other foot. Jumping in late with an offering didn’t work for MSFT’s competitors in the mid-90s and Windows Phone 7 won’t work now.

    Ironic for sure.

    1. You do realise that MSFT was late to the office productivity market, right?
      When MSFT launched Word, Word Perfect was king, and everyone scorned their offering (me included). I’m sure MSFT will be pretty happy if history repeats itself

  10. It would have helped if Robert did a little more of that analysis he is talking about here. Like read the original news where this piece is one tiny part of a much bigger picture. Yes, the initial tech press missing the channel part is a failure – but only in the way the tech press as a whole has become a failure – for example unthinking ‘analysis’ and knee-jerk commentary plus in many cases blatant bias.

    Far example a real journalist would have looked into what typical mobile phone sell-through rates are in order to get an estimate wof the likely sales figures. Has one of them done it? No.

    The bigger picture – as stated in the original piece is that these sales figures are decent – not a disappointment – and that they are part of a long process that could easily take as long as two years.

    Mobile phone markets change very rapidly – as do all tech markets. Most of the reports that actually read the interview and then thought about it came to what is probably the right conclusion – Microsoft is doing OK so far – not spectacularly but not badly. And that is about where they should be. THis isn’t a 60 day window for success – it is a 600 day window for success.

  11. If the units really are selling that fast and these aren’t in some warehouse somewhere then why doesn’t Microsoft just come out and give us REAL sales numbers? Hint: they aren’t all sold and Samsung Focus does NOT represent all the units being counted here, so who is being fair here and who is applying some weight to the scales to help their favorite platform seem like it’s doing well in the marketplace?

    1. One reason MS may be hesitant to release actual sales numbers is precisely because of the “take a number and run with it, regardless of what it means” mentality of the tech press. Releasing sales numbers (we sold 350k phones, it’s in line with what we expected and we’re in it for the long haul) would quickly become “Android sells as many phones in a day as MS does in a month, FAIL (see today’s SAI). Avoiding that FAIL label early is important, MS needs time to gain traction, which it looks like it’s doing (my take has always been that they’ll end up a solid, respectable, but distant 3rd). Agreed the sales to dealers numbers aren’t quite kosher, but somewhat understood why they’re behaving this way.

      1. So why release any numbers then? Scoble isn’t the only one to notice the small print and question the actual numbers of sales. Moreover, there is incredible pressure on Microsoft after the Kin debacle and pitiful WinMo sales over the past couple of years to show that it has regained momentum. The trouble is, WinPhone 7 is half-baked and it won’t be truly competitive until next Summer when it gains significant system updates (inc. copy and paste and ability of 3rd party apps to run in the background). Consumers are presumably aware of these shortcomings and not buying into the advertizing. They can road test Android and iOS devices side by side.

        Instead of trying to create the illusion of great sales, Microsoft should be focusing on getting the operating system to parity with its competitors. It is very early days and I very much doubt WP7 will fail but it’s climb will be slow and likely never catch Android (or even iOS). Microsoft is not used to coming second or third in a market.

  12. Give me a break. Microsoft is marketing these. Most human beings see that Microsoft is selling these phones and are paying (at least in part) to manufacture the phones. In fact Microsoft is even opening stores around the world where consumers go in and buy these phones directly from Microsoft.

    This is being pedantic with the numbers and playing a game that just is meant to mislead. If these are all sitting in a warehouse somewhere then why report the numbers at all?

    Plus, how many billions have Microsoft invested in these 1.5 million “sales?” I know Microsoft applies certain “grease” to get OEMs to make lots of phones and to make the numbers seem more impressive than they really are.

    My point is: how many people actually have a Windows Phone 7 in their hot little hands right now? Certainly NOT 1.5 million. The rest is just channel stuffing. How much stuffing? We don’t know because we don’t have the real sales numbers.

    1. wow, Microsoft releases numbers and its not good enough for you.. than its wrong, let me spell it out
      Microsoft sold 1.5 mill in 6 weeks to stores that purchased them ….
      lets see Google activates 300,000 per day correct? do the math and tell me how many android phones are out in consumers hands !! androids numbers don’t add up plus they have over 100 handsets and tablets and have been advertising for 2 YEARS … what is wrong with you…

  13. Yeah, the tech press is broken, and you are the perfect example of that.
    But you being THE Robert Scoble, I guess this all mean that WP7 sales are about to go through the roof. That’s how “reliable” your predictions usually are!
    By the away, how’s that retail business?

  14. Anyone able to comprehend the English language can clearly read that they have been sold to carriers, and not necessarily to consumers; Microsoft cannot be responsible for your inability to read properly.

    1. Hmm, you might have just missed my point. I never said I misread the press release.
      I did say that Microsoft should not have released it in the first place. And I called it a cheap shot. Which I still think it was.
      And of course is Microsoft not responsible for people misreading their release and I never claimed that either.
      What MS did today is like serving imitation crab meat to a group that is waiting for lobster. In such a case, a) a blogger like Robert should point that out, especially if others are starting to cheer without looking at their plates and b) its perfectly fine to speculate about the reasons why they put out something at all, something that seems close to what people expect, but at a closer look is really quite different.
      It seems like a hastily put together Christmas sales booster to me. Cheap. If not desperate. Do you have any other explanation of why that release and why today?

      1. I would agree with you if Microsoft had presented the crab as lobster, but they didn’t. I happen to think the reason the figures are sales by manufacturers to channel partners is because they did it hastily, it’s going to be a lot easier for them to ask the 4-5 manufactures how many devices they have dispatched from their warehouses than it is to ask all of the carriers and independent phone retailers.

        The real metric people should care about isn’t sales but activations, which should be accurate; unlike Windows Mobile, Windows Phone doesn’t do much without being linked to a live account.

  15. Don’t be a dick. Is this a case of a tech writer being lazy or a case of some bored moron with nothing better to do trying to be a smart ass? I’m no fan of Scobie, but I’m much less a fan of people like you.

  16. We’ll see. I certainly don’t consider WP7 to be feature comparable with Android 2.3 or iOS4.2. It will catch up over time but it’s the ecosystem that matters. If the programming tools are so superior, how come most of the available 3rd party apps don’t auto-update the tiles (one of the few innovative features of WP7)? The icon layout of iOS is getting tired. Android’s desktop looks a mess. Here is a spot where WP7 could excel but currently doesn’t. I doubt Microsoft will ever see more than 20% of the phone market and that is a good thing for everyone.

    1. The reason we’re not seeing massive numbers of apps leveraging live tiles yet is because the platform is still new – devs need the infrastructure in place.

      What’s better – release a working app now and grab marketshare or release a “complete” app later when others have already tapped the market?

  17. http://wmpoweruser.com/microsoft-hits-12000-registered-windows-phone-7-developers-giving-away-hundreds-of-phones/

    Microsoft gave away a lot of platform phones as does Google at I/O conferences. They also paid developers to make Windows 7 apps before the platform was released in a subsidy program and had all sorts of discount offers to Microsoft partners.

    They may be counting these freebies as sales, and they may be counting deferred sales. Both of which would be deceptive to ordinary people, but would not be completely inaccurate.

    They’re marketing to kids now saying you can play XB360 arcade games on the phones, but the only people that can afford expensive smart phones are adults with jobs and no time to waste on retro games. Another bad sales strategy from Microsoft.

  18. What you’re missing is that the vast majority of the 1.5 million units _sold_ by manufacturers are actually also sold to end-users – as we all know a lot of stockists worldwide are on backorder at the moment.

    I personally know several developers (myself being one) that did not get their hands on an actual device until after the six week mark due to low stock locally – this from people across three continents.

    Worth mentioning is also that two weeks out of those six there was hardly any stock at all anywhere as manufacturers only part-delivered what was initially ordered from the carriers in Europe and Australia. It was only just before the US launch that they were able to even start meeting demand.

    Looking at the raw figures though, compared to the iOS and Android launches, I would say these sales are on par. Of course that’s not an entirely fair comparison as more people, overall, are buying smartphones today than they did back then but still.

  19. It’s obvious there aren’t that many. I have not seen a single Windows Phone 7 in the wild. Not one. If there were 1.5 million out there, you’d start to see people using them.

  20. If you would’ve read the original story completely, you should notice that they announce “phones being bought and stocked by mobile operators and retailers on their way to customers”. I guess it’s the media and bloggers who’s at fault here – as are you.

    1. I think one of the most promising signs for WP7 is that Apple fan boys and fan blogs go out of their way to discredit it. I own a WP7 device. I could have bought an iPhone or an Android device. But, I didn’t.

  21. I’m afraid almost any “sale report” of any vendor in any business news is talking about sales to distributors (not even to the retail shops, but rather to 1-5 huge distributors).

    The information about the sales to end-user is very hard to calculate and this information cost a lot (companies like gfk and npd are tracking them, but they have a lot of problems in the modern world of e-commerce and global distribution)

    Also, this honest amount of “end user sales” doesn’t mean very much for investors and business parthers of Microsoft and they’re are the people, who pay for the business news in the first place :)

  22. That’s actually for Window Mobile 6.5. Active users of MS’s official Facebook app is currently around 232,530 (as of this post)

    http://www.facebook.com/apps/application.php?id=7933375107&v=info

    That’s for the Microsoft application, NOT the integrated experience by entering your Facebook information in the phone. I have a few friends with WP7 now, and half of them show up as users of this app, for what it’s worth. I only use the application once in a while, and don’t show up as an active user, though I appear as an active user on the WM 6.5 one, because I have an HD2 at my work desk that is connected via WiFi that I poke around with at lunch (at least until I sell it).