"Market Share" "Installed Base" and Consumer Electronics

redrum writes "Analysts and reporters like to talk about market share statistics, but the conclusions they draw are often misleading, RDM reports. Market Share Myth 2007: iPod vs Zune and Mac vs PC takes a look at how numbers are used to paint grossly inaccurate portrayals of the market share of the Zune among iPods, and alternatively the Mac among PCs. A follow up article, Market Share vs Installed Base: iPod vs Zune, Mac vs PC demonstrates how the conventional wisdom of market share reporting can be turned upside down by simply comparing what vendors actually sell. An eye opening, in depth look at the real numbers behind PCs, music players, and console games."

Comments

My favorite "market share" story: AppleWorks

[dpbsmith]

During the 1980s, the computer trade press ran top-forty-like software sales ranking charts. About a year after the release of Lotus 1-2-3, it occupied #1 slot and did so, regularly as clockwork, month after month. It became a unchallenged truism that 1-2-3 was the best-selling software title, perhaps of all time.

Gradually, it transpired that this simply wasn't true. The best-selling software title was, in fact, AppleWorks, a spreadsheet/word processor/"database" for the Apple II line.

What had happened was very simple. Apple sold AppleWorks directly. The only place you could buy it off the shelf (which at that time was still an important sales channel) was at an Apple dealer. That AppleWorks outsold 1-2-3 should not have been much of a surprise, because it was much cheaper, and because Apple dealers frequently included in it attractively-priced bundles.

But of the published figures were based on sales by Corporate Software, Incorporated. Since AppleWorks was never sold by Corporate Software or any other third party, it was literally off the charts.

Not real sales

[cperciva]

That AppleWorks outsold 1-2-3 should not have been much of a surprise, because it was much cheaper, and because Apple dealers frequently included in it attractively-priced bundles.

This qualifies AppleWorks as being one of the most distributed pieces of software, but doesn't really qualify it as being one of the most sold pieces of software. For something to be "sold", it must be "bought"; and for something to be "bought", there must be a deliberate action ("hey, I want that"), not just a grudging acceptance ("in order to get X, which I want, I have to agree to have Y and Z, which are utterly useless garbage").

Most interesting part

[proberts]

The most interesting part of both articles was:

====
In the final quarter of 2007, Apple earned $7.1 billion in revenue, compared to Microsoft's $12.5 billion in total revenue. Yes, that's right, Apple brought in more than half as much money as Microsoft, despite Windows owning 98% of the PC market.

Even stripping Apple of its iPod revenues, which PC pundits love to do, the company still earned $4.4 billion on its Macintosh business, over a third as much Microsoft brought in from its entire Windows, Office, and server operations combined. Apple's 2% of the PC market doesn't seem so small anymore.

Of course, Microsoft actually lost a lot of money on all of its consumer electronics products, so looking at profits, Apple earned $1 billion compared to Microsoft's total $3.4 billion in profit.
====

Now, I don't know why he chose only the fourth quarter, but it's going to make me go back and look at the numbers for 2004-2006, because if that's a trend it's a very interesting one.

Paul

Re:Fun with numbers

[bockelboy]

Come on, looking at the net income over the last 5 years is about as fair as looking at just the 4th quarter (Holiday season probably accounts for 1/2 of Apple's sales).

Notice that in 2001, we are talking pre-explosion of the iPod. The net income for Apple was -$37m. Last year's net income for Apple was $1989m. Look at the last couple years of income:

(FY2006) 1,989.00, 1,328.00, 266.00, 69.00, 65.00, (FY2001) -25.00

After the explosion of the iPod (FY2003), we have roughly exponential growth

The net income for Microsoft was $7346m in 2001 and $12599m in 2006. Here's the last couple years of income:

(FY2006) 12,599.00, 12,254.00, 8,168.00, 7,531.00, 5,355.00, (FY2001) 7,346.00

Slow, but steady growth.

If you were an investor, who do you put your money in? The company whose income increased about 20% / yr over the last 5 years, or the company whose income has been more than doubling for the last four years? It's two completely different kinds of investment: stable, mature company or hot, rising star?

(Yes, I have run roughshed over some of the math, but that's the general idea.)

Re:That's what I used to think

[that this is not und]

Back then, many people still hated IBM, because it was the 'big monopoly' computer company that had reigned in power for decades. Plus, IBM introduced OS/2 along with the PS/2 line and Microchannel in such a way as to recapture the market and kill the cloners. Lots of us were very skeptical of IBM for that reason. Similar to the way that lots of people are skeptical of Microsoft (or Apple, or any other 'big company' pushing their product with hype and marketing fluff.)

Part of the reason OS/2 floundered while Microsoft's OS succeeded is that OEMs didn't want to bundle OS/2, and for good practical reasons. For ever unit sold with OS/2 on it, Compaq had to give a sizeable amount of the sale to IBM in the form of licensing for the software. IBM was a competitor of theirs in the hardware market. By going with Microsoft, they weren't required to hand off money for ever unit sold to a competitor, as Microsoft wasn't involved in the hardware market.

There are other factors, as well, in the success of Windoze over OS/2. But many of them are never mentioned, it's just 'big evile Microsoft against poor IBM' which is, frankly, a pathetic distortion of history.

Re:"Myth busting" with undocumented assumptions?

[mp3phish]

Give me a greak. They bought Optiplex and Latitude systems which "barely" lasted 3 years? PLEASE. They all come with STANDARD 3 yr warranties. They ALWAYS last 3 years +. Meanwhile, the mac's come with 1 year warranties and most IT departments do not purchase the extended plan. (not at the price he is showing as the "average")

I'm sorry, but this article lost 100% total credibility by stating that dells can barely be supported for 3 years. If his so called "Dedicated IT Department" is having that many problems with the Dells, then they have some major competency problems. We deploy $4 million in dell client systems a year and around 1/2 million in apples in a managed environment. I can tell you for sure that the apples lifespan is around the same as any other brand. If anything, the apples cost the IT department more in labor per machine because their ASP certification process is more expensive and harder to maintain, and parts are not as available in the warranty realm as they are with Dell, which guarantees (and are the only one in the industry who comes through on it) overnighted parts on every optiplex and latitude sold.

The systems break equally as much at best, and if anything, more when you are dealing with gen1 apple products (gen1 macbook, gen1 macbook pro, gen1 intel iMac, gen1 PPC iMac (after the ilamp). When you are forced to deploy new motherboards to all your newly deployed gen1 macbooks, the labor costs tend to go up. The last time dell systems required major component replacements in a widespread environment was with the GX270 motherboard leaky capacitors (which did not cause substantial problems until most systems were out of the 3 year warranty). This issue is over 4 years old prior to it there were no other major issues. These types of major recalls are a regular occurrence from Apple with every gen1 product they ship. These aren't published recalls, they are ASP recalls. This means that the only people who know about them are the service providers and anyone they tell (like customers). Apple does not admit in the press that they are recalls, and it is against NDA for an ASP to.

If you have "read plenty of articles" stating that apples last longer then more power to you. But articles don't make facts. Real world events are facts. Articles are just articles. Most articles which state that apples last longer are not based on fact, but are based on the same personal experience of the author, who has had no extensive experience dealing with large scale deployments of PC hardware, or even mac hardware for that matter.