Lies, Damn Lies, and Android Tablet Numbers

Lies, Damn Lies, and Android Tablet Numbers

Image courtesy of Retrevo

I have been on the hunt for over a year for an Android tablet that meets my needs: I have abandoned hope for now that will be anything appealing in the 10″ space, since Android is currently inferior and fragmented for gaming and a non-factor in music production software. But in the 7″ space there are some cool options, yet in spite of trying three different tablets (Galaxy Tab, Acer Iconia and HTC Flyer) and finding that the size is perfect … I haven’t managed to find a device with enough positives that I can accept the flaws until recently. What flaws?

My Three Problems With Android Tablets

There are three basic issues I have with Android tablets:
– The hardware is all about compromises.
– The OS is either (a) oversized smartphone or (b) the worst mobile OS I’ve used since Windows Mobile 6.1.
– The sales figures are all lies. (of course, this doesn’t impact my usage, but as a statistician it drives me nuts and Samsung’s lying impacts my decision-making as much or more than Apple’s Draconian moves)

Problems With Android Tablets: Hardware
The first one makes perfect sense – when you have a massive customer who will ensure a big pile of cash in exchange for guaranteed supply and quality, you would be a fool to ignore it. As an analogy, I worked for a semiconductor materials company through the era when the first 1GHz chips were made – and believe me, those chip makers needed to ensure a constant flow of high quality, fast turn materials to keep output high because yields were dismally low. That meant there were accounts and efforts for ‘Tier 3′ customers (universities, etc), Tier 2, Tier 1 … and THESE guys. That is exactly the situation Apple uses with its’ suppliers now.

Another analogy – in my first job we were working on configuring detector systems for infrared spectrometers using resistors – only where we had specified precision (1% tolerance) resistors our purchasing folks made the decision to save money by getting 3% resistors (less than half the price). Anyone who has dealt with analog components like this knows what that means – ALL the parts from +/-1% are culled from the manufacturing line to feed those willing to pay the premium for the tolerance. So what you get with 3% is really 2 distinct 2% distributions separated by 2% – so on average you will be jumping from +2 to -2 … and NEVER seeing parts within +/-1%.

Again, by securing a huge quantity and the highest quality, Apple has forced everyone else to pick at whatever is left. And they are paying a premium since they cannot ensure the same quantities.

Problems With Android Tablets: Operating System
The second one – tablet operating system – I know is somewhat subjective, but my thoughts seem to echo a general consensus that Froyo/Gingerbread are not really ‘tablet optimized’, and that Honeycomb was rushed out the door to compete with the iPad … and it shows. The longest experience I have had with a 7″ tablet is the Acer Iconia, and rather than adapting to Honeycomb I found that paired with my Droid Pro I bristled more and more each passing day due to the idiocy of the OS. It was half-baked by Google’s own admission, was never released as AOSP (the ‘open source’ apologists have a truckload of excuses for THIS), and will die an ugly death as Ice Cream Sandwich arrives. It is just a lousy system that really doesn’t work well.

In fact, as I say using Froyo on my Droid Pro made me constantly shake my head at the wrong-minded choices of Honeycomb. So when I recently got a 3G HTC Flyer from US Cellular to review, I reveled in the glory of Gingerbread in comparison. It is faster and more efficient, but as Google has always said it is NOT a tablet OS and it shows. Watching the notification screen pull down to full-screen over the course of a few seconds reinforces that.

But Google and operating systems is a pretty ugly tale in general, as shown in this dismal tale of fragmentation and abandonment. But I won’t delve into that here other than to say that I doubt many tablets not named Galaxy will see the Ice Cream Sandwich update. In fact, let me just say that for those looking for performance, support and integration .. right now the best way to get that is through a ‘vertical integration’ solution called ‘Nexus’.

Problems With Android Tablets: ‘Sales’ Numbers

As the recent Google event we heard that there were ‘around 6 million Android tablets out there’. Some have taken this as a statement of market share – comparing that out of context statement with Apple’s fiscal declaration of 11 million tablets SOLD last quarter and awarded Android with ~25% market share.

Those people are idiots.

In fact, as noted here, folks like Strategy Analytics have stopped even trying to pretend they have real numbers. At this point handset manufacturers like Samsung have stopped giving out real shipment numbers, instead giving percent change year-to-year in shipments.

This would mean that since we know that Samsung claimed 1 million Galaxy Tabs SHIPPED in Q4 2010 (which we know actually resulted in under 100,000 SALES), if they claim a 40% increase in Q4’11 we will see people adding in 1.4 million as a number – even though the 1 million was already debunked!

Kevin Tofel clarified the numbers with Strategy Analytics recently, and he was told:

”Yes, the press release refers to shipments, not sales. All sub-versions of Android are included. Yes, the B&N Nook Color tablet is included in the tablet figures.”

So they are using estimated shipments of the Nook Color in addition to the estimated shipments of actual Android tablets. People who have looked deeper use Google’s own numbers to estimate that fewer than 3.5 million TOTAL Android tablets have been SOLD … which is very different from the 4.7 million shipped LAST QUARTER.

In advertising, there is a term called ‘puffery’ which has legal implications, and is defined as “promotional statements and claims that express subjective rather than objective views, which no “reasonable person” would take literally”.

Let’s just say that Android Tablet sales numbers are puffery and leave it at that. In fact, according to reports, Android smartphone numbers – like the ones used to ‘show’ how Samsung outsold Apple last quarter (which I think is true, just not based on these numbers) – are also puffery.

Why does that matter?

Puffery gets companies in trouble because it has been shown that consumers respond to those claims with money by purchasing ‘leading’ or ‘effective’ products. So if Samsung had a commercial claiming ‘#1 Smartphone Maker’ without the distinction of ‘based on comparing units sitting in warehouses to actual sales of other phones’, they might get in trouble. But by releasing these misleading numbers to the tech press, makers get someone else to do their propaganda work for them.

And my point is that the impact isn’t just on the Android/Apple/Microsoft/RIM battleground. Even within the Android field, the fictitious Samsung numbers had the immediate impact of making them the ‘#2 tablet maker’ and ‘first real iPad challenger’ … when in reality they had the same dismal sales as the Xoom, Playbook and (pre firesale) TouchPad. Suddenly Asus and Acer and HTC are battling uphill to be taken seriously against Samsung.

Problems With Android Tablets: The Amazon Problem

In spite of all this stuff, most serious-minded people have come to the rather obvious conclusion that “Apple Has Obliterated Android Tablets”.

Actually, I wouldn’t say it that way – I would say that Apple has DOMINATED Android tablets.

Amazon, however, is poised to OBLITERATE them.

How? Well, let’s just list them out:
– Amazon already has more PRE-ORDERS for an unreleased product than ANY Android tablet has in FULL LIFE SALES.
– Amazon is selling the Kindle Fire for $199, a price very difficult for others to match without significant losses.
– Amazon has a built-in ecosystem to help recoup the low price. Everyone else … doesn’t.

Before we get to sales, let’s look at the pricing model:

A preliminary virtual estimate conducted by the HIS iSupplu Teardown Analysis Service places Kindle Fire’s bill of materials (BOM) cost at $191.65. With the addition of manufacturing expenses, the total cost to produce the Kindle Fire rises to $209.63. When further costs outside of materials and manufacturing are added in—and the $199 price of the tablet is factored along with the expected sales of digital content per device—Amazon is likely to generate a marginal profit of $10 on each Kindle Fire sold.

Basically, this means that Amazon will LOSE $10 per Kindle Fire, but based on the baseline estimate of $20 per Kindle user in revenues they expect to earn $10 profit. Let’s set aside the content for a second and consider this – Amazon is LOSING $10 per device … and that device is essentially a BlackBerry Playbook with a customer UI and the camera and SD card slot removed.

What sort of business model is this? Certainly NOT a hardware makers model – it is a ‘razor & blade’ model. This isn’t new – early this year Amazon stocks tanked on low earnings, and part was due to estimates that they were losing money on the Kindle 3G when it sold for $189.

So we know that the Kindle Fire is the razor … but what are the blades? There have been plenty of articles written about ‘how Amazon makes money on the Kindle’.

And as BusinessInsider says:

The Kindle Fire is a way for Amazon to sell more things: Media, like books, apps, movies and songs, and also sell merchandise, thanks to its potentially revolutionary Silk browser and an Amazon-centric tablet experience.

This is where content comes into the equation. The assumption – even from the Wall Street Journal and others – is that while digital content is nice, the real value of the Kindle brand is simply bringing people within the Amazon ecosystem where they are likely to buy physical goods.

And while I think that is very true, I believe that in the case of the Kindle Fire there will be considerable pull for digital content – much more than any other Kindle device, or any other Android tablet. Amazon is providing a free trial membership to Amazon Prime, which is likely to get people hooked on all the great free movies and video – and wind up with a number of folks opting for the $79 annual membership.

Some are referring to the Kindle Fire as a ‘super eReader’. And that is true – yet it is much more. With ‘only’ 8GB of storage (which Dan addressed here) you will depend more on streaming than storage, yet 8GB is still a decent amount of space for a moderate amount of digital content.

Folks will definitely load up on some music and movies as well as their ebook libraries, but there are also apps. I have already confirmed with a couple of vendors (most notably Nitrodesk whose TouchDown is a critical app for me) that their apps will work on the Fire, and we also have confirmation from Amazon that they are ensuring that apps added to the Amazon Appstore for Android will work on the Fire. So out of the gate I have over 100 apps and utilities and games for the Fire.

There is still much we don’t know about the Kindle Fire. While the performance of the Playbook is on par with the original iPad, we don’t know how the Amazon UI or underlying Android kernel will impact that. We also don’t know about battery life, and just how well the UI will bring it all together. Perhaps it will be the most successful flop in recent memory …perhaps it will just be a massive success.

We will know in a couple of weeks … which should make it clear that the Kindle Fire is the tablet I put into the ‘until recently’ slot. I am willing to give up the camera and SD card in order to get a properly integrated experience, just as people are willing to deal with some annoyances of various smartphones to get the benefits of that experience.

What Does This Mean for Android Tablets

Regardless of how the Kindle Fire performs when it lands, the message to Android tablets is clear: you’re screwed.

Why? Look at the #1, #2 and #3 tablets of the ‘iPad Era’. Also in the top 5 or 6 is the BlackBerry Playbook, whose hardware the Kindle Fire shares, but which has already been declared a massive failure. #3 is the HP TouchPad, which is only in that slot due to being fire-sale priced at $99/$149 for the 16/32GB models. So forget about that. #1 is the iPad, which single-handedly created the *current* tablet market as it looks today. It is massively vertically integrated with single-vendor OS, hardware, and store. Developers flock to the money generated by the store, and accessory makers have a huge market reach to a single product design.

Now we have the #2 yet unreleased Kindle Fire. It has a single design (so far), massive sales, a huge ecosystem behind it, and is massively vertically integrated with single-vendor UI, hardware, and store.

That makes things pretty clear: Android tablets all have tweaked out versions of the Android OS, anywhere from OS 2.2 (Froyo) to 2.3 (Gingerbread) to 3.0, 3.1 or 3.2 (Honeycomb variants). They ALL have different hardware designs, and disparate ecosystems. The ability to run software, use mods, get updates and so on are completely unknown. Accessory makers can’t count on a design for accessories, and software makers need to prepare for dozens of hardware variants. It is the wild west – which is great for some, but not so great for most.

The Android experience has failed to catch on with tablets like it has with smartphone users for one simple reason: the user experience is different. It has already been proven that those who called the iPad ‘just a big iPod Touch’ were both simple-minded and wrong – yet that is essentially all Android tablets can offer.

Where Android smartphones excel – Google email/maps/docs integration – are places tablets see less usage. And in areas where people want to use tablets – games, movies, etc – Android tablets are performing woefully.

Of course, the other reason Android tablets fail is price: the Motorola Xoom started out as a $800 WiFi-only tablet. I know, RIGHT?!?! Android makers simply don’t have the economies of scale of Apple, the vertical integration of Apple and Amazon or the ability to use a device as a razor to sell some other content as Amazon is doing.

I have no doubt that we will see better Android tablets in the future, but unless they can somehow provide a full end-to-end value proposition that works for customers they will continue to be bit players watching from the sidelines.

What are your thoughts on Android Tablets, the Kindle Fire, vertical integration, and the future?

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About the Author

Michael Anderson
I have loved technology for as long as I can remember - and have been a computer gamer since the PDP-10! Mobile Technology has played a major role in my life - I have used an electronic companion since the HP95LX more than 20 years ago, and have been a 'Laptop First' person since my Compaq LTE Lite 3/20 and Powerbook 170 back in 1991! As an avid gamer and gadget-junkie I was constantly asked for my opinions on new technology, which led to writing small blurbs ... and eventually becoming a reviewer many years ago. My family is my biggest priority in life, and they alternate between loving and tolerating my gaming and gadget hobbies ... but ultimately benefits from the addition of technology to our lives!

10 Comments on "Lies, Damn Lies, and Android Tablet Numbers"

  1. Thomas R. Hall | November 1, 2011 at 8:26 pm |

    What saddens me is that Amazon forked Android and has their own experience for the Kindle Fire. To me, even though it can run Android apps (from Amazon’s App Store only), it’s a non-starter as an _Android tablet_ to me. It is a vertically integrated Kindle content consumption device, but not a true Android tablet (to me). I personally will NOT be using the Silk browser, especially on sites which require logging in via SSL.

    Having said that, Amazon will sell gobs of these. And no one will care that they are a forked version of Android, or that they can’t run apps unless they come from Amazon, because the experience will be seamless and integrated. And no other Android tablet maker can say that.

    Unless Google starts dealing with the whole experience, end-to-end, they will continue to have several manufacturers churning out sub-par products which are obsolete as soon as they release them, replaced by the “next new hotness”.

  2. Honestly, I think what this proves is that the majority of people want something that “just works”. Apple did it. Amazon is about to. Everyone else gets the scraps.
    Sent from my iPad

  3. I think of this a little more like the old Mac vs PC wars.  Macs were just like the iPad….but a bit more open than iOS is now.  PC’s are Android.  In Mac, you had less choices.  In PC you have more choices but sometimes things didn’t work well.  Some people don’t mind Android.  Some people love iOS because it does generally just work (I say generally….iOS isn’t perfect….if it was there would never be an update…).  This is just like Mac vs PC if ya ask me.

    I the Kindle Fire is currently selling well…but what will the returns be once it ships?  I am sure some people will love the Fire but others may be disappointed.  I will wait and see on this.  I don’t think the Kindle Fire will totally cannibalize things for Android as it just doesn’t have the storage pr expandability of other tablets.  We’ll see.

    Android 4 is the threshold.  It can fix some things with Honeycomb and make it better.  If all it did was bring back mass storage mounting I would be overjoyed but I think it will do more than just that.  Since it’s not shipping on any level yet, we’ll see.

  4. 😆 Joel, you lost me! I don’t get the analogy between the iPad and Android with regards to Mac & PC sales and the focus of this article. Wouldn’t this need to be more directed to full Android tablets competing against stripped down quasi-Android tablets that sell for less money? I think you can take the iPad out of that whole analogy; right now, anyway. iPADs OWN the tablet market. Amazon may just be positioned to dominate the non-iOS portion of the tablet market. Know what I mean, Vern? =)

  5. Well, you lost me when you started griping about the sales figures.  They have absolutely nothing to do with the usability of the tablet, who the heck cares if someone puffed up their numbers if the device meets your needs.  As someone who owned both the original iPad and the iPad2 and sold them both, I always chuckle when someone claims the iPad isn’t just a big iPod Touch, because that’s exactly what it is.  Turn on each device and what do you see?  A home screen filled with program icons and that’s it. Swipe to the left and you get another page of icons, just like on the Touch, or sure, there are some applications that take advantage of the increased real estate, but that’s also true for Android. The iPad didn’t even support tabbed browsing until this latest release. Apple has been so mindful of not fragmenting the OS they have left off/crippled features that a tablet might want, remember the flare up about the mute/rotate switch? While, I think Honeycomb is far from perfect, I find it interesting you think it’s completely awful, yet you fail to point out even one specific issue?  You just state is awful and leave us wondering why. Much like your the rest of your post you seem to bent on crucifying Android, yet your basis is just mostly that you don’t like it or how some of it’s OEMs do business.  Not much of an argument, if you ask me.

    I was hoping to get some real feedback on why Android Tablets aren’t being adopted and used. For the record I currently own the OG Galaxy Tab and a Transformer. I decided to keep them over the iPad because they fit my need better… in my case I primarily use these for email, web browsing and NewsFeeds and really find that both Android and iOS handle these pretty well, but since I use mostly Google Services such as GMail, Reader, etc, they work better for me on Android.  Plus it was a lot easier to sell the iPads than it was the Android Tablets! 🙂

  6. Well I do think that phoned up sales number do impact the overall usability of a device.  Why?  Because it speaks to a couple of things:  it speaks to the company’s willingness to deal with people honestly, which may impact support.  It also speaks to the potential for application support.  If the numbers are faked, developers may choose not to develop for a platform.  They might be fooled for a while, but if they can’t make any money – because there aren’t any “real” customers, they will ultimately leave the platform abandoned.  Those things absolutely DO speak to the usability of a product!

    And whereas I agree that superficially, the iPad seems like a big iPod Touch, it wasn’t just slightly enhanced apps that made the difference.  In some cases the apps are dramatically enhanced.  In other cases they are simply unavailable on anything except the iPad.  Initially, this was true for Pages and Numbers.  More recently it was true for Garage Band (which was just finally released for iPad, but the experience is definitely NOT exactly the same).   Let’s also not forget that there is no 3G available on the iPod Touch either.   So the differences may not be necessarily huge in the grand scheme of things, but the iPad is NOT just a big iPod Touch – you are actually incorrect in stating that it is.  

  7. Personally, I don’t see Android Tablets as quite the failure as Michael suggests.  When I look at the Android Tablet market, and the Android market in general, what I see is essentially a platform that seems to be endlessly driven by techno-geeks that lust over hardware specs more than usability of the devices.  Seriously, if you look at any review of Android hardware, it seems like 90% of the discussion revolves around hardware specs like processor speed, screen size, screen type and resolution, camera quality, and on and on…  Most of the new phones are being released with Gingerbread, but some still have Froyo (and these are NEW phones!).

    While geeks are satisfied lusting over hardware specs first and foremost, the typical end-user is far less concerned with specs and far more concerned with how well the phone works.  Same thing with tablets.  Any tablet that runs anything other than Honeycomb in my opinion is not really a tablet.  It really doesn’t work well, like the native iPhone apps on the iPad.  It is just too clunky.

    I like Honeycomb.  To me, stock Honeycomb is a good mobile OS (like stock Android, imo).  There are trade-offs to the OS, much like any other mobile OS, but these are trade-offs that I think the majority of people can live with.  The problem with Honeycomb is that it is different enough from Froyo and Gingerbread that it takes some time to get adjusted to how things work.  Since the iPad and iPhone share much of the same DNA, if a user can operate one device, he/she can operate the other.

    I think that Ice Cream Sandwich will be a major step forward for Android devices.  Finally unifying the underlying phone/tablet OS infrastructure will help developers design better native tablet apps, while also allowing for relatively seamless support of smaller devices, and vice versa.  End users will have less confusion with how things work when switching from their phone to their tablets.  The problem with Android is, and most likely always will be, that manufacturers have to differentiate their devices through OS skinning.  Once you break down a device into its components, they pretty much all look the same (dual core processors, 8 MP camera, 1 GB RAM, 32 GB storage… you get the picture).  For whatever reason, Android manufacturers choose to spend money developing UI skins rather than developing truly unique designs.  This is probably due to the relative efficiency from the standpoint of economies of scale with UI skinning as opposed to creative device design (Sense can be applied to all HTC Android devices top to bottom).  Nokia would have been a great counterexample had it chosen to create Android phones instead of WP7 devices.  Their new WP7 phone lineup looks outstanding.

    Samsung and HTC churn out new devices at an incredible rate, but they all end up looking vaguely familiar.  I wish they would release fewer devices and instead work on unique designs, particularly for their flagship models.

  8. Gear Diary must have a gripe with Honeycomb Android Tablets sales. I think that’s like the third article in a month about how (Samsung in particular) and all the others lie about their tablet sales.
    Like some others said before – why would that impact the user experience for someone? At best something like that would mean that some company would make an accessory for the device expecting sales.However like Kevin Tofel clarified – Google is releasing percentage numbers of different Android flavours activated and by that numbers (and this are sold devices), the estimate is about 3,5 million Honeycomb devices were activated + quite some number of Android 2.x tablets, that would include Nooks, Samsung TAB 7, HTC Flyer, Archos devices. the Chinese stuff… Compared that to Apple’s 20+ or so million iPADs you should get 20-25% of the market and that not really that much of a disaster.

    Also I don’t really get this fascination with “instant success” – everything that doesn’t sell in millions from the start is a failure and should be scrapped? Why, I don’t remember Android being a success in it’s first year and first couple iterations – iPhone outsold Androids back then by a huge margin, and yet I don’t think anyone can say that Andoid is not a success now – especially in terms of market share and sales numbers of smartphones. The 2012 with new generation of tablets and Ice Cream Sandwich should show if Android can compete with iPad, maybe it can’t, but I would still bet on Android if for nothing else then, because the history showed that more open systems and many manufacturers should prevail in terms of market share over one closed system/manufacturer (like PC vs Mac, PocketPC/Windows Mobile vs Palm, Android vs iPhone…)
    And if Android would fail against iPAD then by this time next year Apple will have to consider Windows 8 on tablets as it’s main threat.

  9. “Gear Diary must have a gripe with Honeycomb Android Tablets sales.”

    I have an issue with liars, and those seeking to use false information to sway markets.  In some areas you can get in serious hot water for such falsified statements as substituting ‘sales’ and shipments.

    And I *specifically* said “this doesn’t impact my usage”.  In other words, it isn’t a ‘system flaw’ in the same way crappy game support, or poor screen utilization are.  I was clear on that – but I have a real issue with companies that hide behind fabricated numbers.

    And it isn’t remotely specific to Android – I have taken Sony to task *repeatedly* since starting in 2009 at Gear Diary, and for 4 years prior at a now-defunct site.  I have also taken Apple to task multiple times for their ‘bad math’, their crappy historic gaming support, their draconian attitudes, and so on.

    “history showed that more open systems and many manufacturers should
    prevail in terms of market share over one closed system/manufacturer ”

    I disagree – the guiding feature is price.

    OK, you choose PC/Mac – PC is NOT open, it is closed.  It has multiple manufacturers, but the *real* reasons it won were (a) IBM was already entrenched in business and therefore grabbed nearly 100% market share in the early 80’s and the PC has never fully relented and (2) PC boxes are cheap. Let’s add in Linux, since that is REALLY open … oh yeah, it is a no show.  DISPROVED.

    Next, WiMo vs. Palm: this is the battle of two closed systems, one with two makers, the other with several.  WiMo was losing consistently due to being slower and more problematic.  But then Palm stuck with the same basic OS as it had when it battled the Newton in 1994 … WiMo didn’t win, Palm imploded.  And NEITHER was open. DISPROVED.

    As for Android vs. Apple, while there is no debate that Android is growing market share – Apple has held steady, gaining slightly each quarter.  Oh, and it is NOT about open vs. closed.  Not at ALL. 

    First off, pretty much the entirety of Android Market share can be accounted for in the fall of RIM, Nokia and Microsoft.  Same for Apple.  In 2007 the market contained a very different set of players, who have now been replaced by Android, Apple and ‘other’.

    Second, the Droid 2 that my sister-in-law has is no more ‘open’ in actuality than my brother’s iPhone 3GS.  It has *potential* to be open, but both are locked in contracts to carriers, both get apps from a single source on the phone, each is locked into an ecosystem by a company that actively dissuades competition with core features (remember: Google won’t allow competing GPS / map systems to ship on the phone, and almost denied Moto the Android license for the Droid because of it … proving to be every bit as ‘evil’, ‘draconian’ and ‘anticompetitive’ as Apple along the way to shutting down a startup!).  But that is a different matter.

    Android is gaining market dominance two ways: (a) price and (b) carrier collusion.

    Remember a few years ago carriers would have a row of $29 – $49 crap-phones, typically a Moto/Samsung/Nokia flip phone.  NOW they STILL have a row of Free – $49 phones, but they are all Android phones.  The value of each new release plummets SO fast that I would estimate the average price paid for a new Android phone is ~$50.

    As for carrier collusion, there is a REASON the carriers push the Android phones – because for them Android is like the ‘good old days’ of $9.99 Navigation and $2.99 ringtones.  Verizon and AT&T at least have pretty much every phone loaded up with crapware, which they use to monetize your actions and charge you wherever possible.

  10. Thenikjones | November 3, 2011 at 1:37 pm |

    The iPad is basically a big iPod Touch, that is why I bought one…

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