40% of Android phones are returned? ‘Absolutely ridiculous’

TechCrunch on Wednesday published a report claiming to reveal “Android’s dirty secret,” and quite a secret it was. According to the report, which cited a person familiar with handset sales for multiple manufacturers, between 30% and 40% of many Android handsets are returned by consumers. “Plainly put, these figures are absolutely ridiculous,” a source told BGR. We spoke to multiple well-placed sources following the publication of that story, but in reality we didn’t have to know the claim was ridiculous. If return rates were in fact “approaching 40%” as the report suggests, vendors wouldn’t just be bailing on Android, they would be going out of business. Handset returns are a huge deal in the wireless industry because every single device returned by a customer costs the manufacturer money. It also costs the carrier money in the event the device was sold through a carrier, and it costs the third-party retailer money if the device was sold through a third-party retailer. Read on to find out how many Android devices are really being returned.

Earlier this month, Google revealed that Android activations have reached 550,000 devices per day on average. While this figure does not directly correlate with Android handset sales, we can use it to get a pretty good idea of how many Android phones are being sold these days. There are some great Android tablets out there and Google TV is nifty, but smartphones easily make up the lion’s share of those activations. Conservatively, let’s say 90%. So that means about 14.85 million Android smartphones are sold each month. If “many” of those phones were returned, it would spell huge trouble for manufacturers. Assuming each return costs the manufacturer $50 — which, according to two of our sources, is a very low estimate — that means Android handset return rates of 30% to 40% would cost vendors hundreds of millions or even billions of dollars each year. Outlandish.

So what’s the real number? It’s tough for us to give an across-the-board estimate, of course, but that’s why we have sources. We have been told by three very reliable sources that a safe estimate for Android’s global handset return rate is “in the low single digits.” That’s a pretty far cry from 30% or 40%, we’d say. Of course not all phones are created equal and two sources did mention that some manufacturer bungles have resulted in higher return rates for individual smartphones. By “higher,” we’re talking teens… not 40% or even 30%.

It’s entirely possible that the source of TechCrunch’s story misspoke. Perhaps he or she was referring to the return rate of Android phones in a single retail shop. To think that 40% of many Android handsets are returned across the board, however, is crazy.

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