"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

Ahhh, roughly drafted

[DingerX]

No offense guys, but:

While analysts once liked to say that the Zune would take over the music player world in the same manner that Windows PCs engulfed the Mac, the situation was really not even remotely similar. Analysts had things entirely backwards.

Sorry guys, the "Pro-Microsoft Press" is as much a straw-man shibboleth as "Main Stream Media's Liberal Bias". Give me a break!

How many analysts out there saw the Zunes Microsoft unveiled last fall and actually predicted a success? I'm sorry, I call BS, along with the claim that the iPod created the market for HD-based players. HD-players existed long before the iPod, and anyone who remembers the lawsuits involving the Diamond Rio knows that the path to iPod's success was oiled with the blood of its competition.

I'm not saying the iPod didn't create a huge demand, and grab a large part of the exploding market, but let's not exaggerate things here.

Put another way, do we really need a pro-mac blog to provide a multi-part essay on why the Zune is not a success? I mean, this thing is as much a dog as the Apple ROKR!

Re:Ahhh, roughly drafted

[Jeff DeMaagd]

The blog entry didn't say that iPod created the hard drive market, it claimed that iPod expanded the market. The blog entry was pretty clear in stating that there were hard drive players before the iPod.

Re:Ahhh, roughly drafted

[SnowZero]

I'm not sue what article you read. The one I read jumped all over between topics, didn't finish one issue before launching into the next, and included graphs that it didn't even adequately explain. Roughly drafted, indeed.

Re:Ahhh, roughly drafted

[gozar]

Expanded isn't really the right word. When the first iPod came along, hard-drive players were using 3.5" laptop hard-drives. Apple found a manufacturer that was about to launch 2.5" drives, and bought 6 months of their entire production, blocking competitors from being able to match their smaller players for the first six months of the iPods life.

It was actually other manufacturers using 2.5" drives when Toshiba introduced the 1.8" drive with which Apple used with the iPods.

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.

"Myth busting" with undocumented assumptions?

[Anonymous Coward]

Myth busting is good. It is even better when it is based on actual documentation, not just some personal pet theories and anecdotes. There are some pretty graphs there, but conclusions based on undocumented assumptions like these can hardly be called "An eye opening, in depth look at the real numbers":

Assigning Macs a five year useful life span, and PCs a two year life span, the installed base for Macs among PCs on the planet is around 4.5%.

Well, assigning this author a low credibility, it is clear that this author has a low credibiliy.

Re:"Myth busting" with undocumented assumptions?

[crmarvin42]

Instead of skimming the article, try reading all of it. He indicates that they idea of 5 year useful life span for mac's vs. 2 for PC's was based on anectodal evidence, yes, but evidence. He didn't just create those numbers out of thin air.

In studying the history of PC purchases made by a client with around a hundred employees, I found the company was still using all of their original Macs dating back to 2001, with a few even older Macs still in secondary use. In contrast, there were no PCs more than three years old still in use, and most of the older models were in poor shape. Around 80% of its machines were PCs, and nearly all of those were commercial grade Dell OptiPlex or Latitude models; the other 20% were Macs. About a third of the entire 115 machines were laptops.

Besides, I've seen several articles over the years indicating that mac's have a longer usful life than PC's. If you need more anecdotal evidence my family has 3 macs that originally shipped pre-Mac OS 10 (2 with OS 9.1 and 1 with the last version of OS 8). they are all currently running OS 10.4 and used every day. I also have one that's sitting in the closet that has 10.3 installed on it and the only reason it's in the closet is because I own more computers than there are people in my house hold.

Re:"Myth busting" with undocumented assumptions?

[0xdeadbeef]

Have you considered the reasons for that lifespan?

PCs are cheap as dirt, and the components are modular and replaceable. Upgrading is not quite the life decision it is with a Mac.
There is a lot of PC software. To compete, PC software consumes resources in a never ending arms race to impress users.
The upgrade cycle is implied. PC software is written with the expectation that most users will have current hardware.

And BTW, as the Mac cultists were eager to point out in that laptop reliability thread from a few weeks ago, anecdotes are like opinions in that they are like assholes. Everyone thinks their ass is demonstrative of reality, while actually, strippers shave and bleach theirs. Does that clear things up?

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.

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").

Re:Not real sales

[C0vardeAn0nim0]

so, by your reasoning MS Windows isn't one of the most "sold" pieces of software ever ?

but it still generates revenue, and for most, this is what counts. specially for shareholders.

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:Most interesting part

[Echnin]

Did you miss the part about profits?

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.

Rouding up, Apple's profits are 30% of Microsoft's.

Re:Most interesting part

[kripkenstein]

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.

Amusing how RoughlyDrafted sort of misleads with these figures, when he is ranting against other misleading statistics. Based on Wikipedia (disclaimer, but I recall it is basically right from the official reports), Apple had almost half as much revenue as Microsoft in 2006 ($19.3 to $44.2 billion). So yes, as claimed, Apple's revenue is around half that of Microsoft's. But look at net income: $1.73 vs. $12.6 billion - Microsoft makes more than 7 times as much, when measured by net income. So, just as RoughlyDrafted says, partial figures can be misleading.

In this case, the cause of the discrepancy is quite obvious: Microsoft sells a product with zero marginal value - software. This is basically making money from nothing. Apple, on the other hand, makes actual 'real' products, that cost money to make - Macs, iPods.

Re:Most interesting part

[maxume]

On 60% of Microsoft's sales. That is not a good thing for Apple. Microsoft can afford to flat out waste billions of dollars and still have higher operating margins than Apple.

Re:Who are YOU?

[crmarvin42]

DId you visit the site at all? I'll grant you that all of his articles are about apple so to someone predisposed to seeing astrotufers, his site would appear that way. My question is, "So what?" followed by "Why such hostility?" Based upon your vehemence, I get the impression that you have something invested in this debate. As long as you RTFA with a skeptical eye, you can still get some usefull information. The point of the article was't "Zune's suck" but that "Market research numbers are BS that can be, and often are, manipulated by analysts to say what every the analyst wants, and here is how!" As to the last line of your post:

Keep drinking your sugar water, you cultist freak. While you suck on pop music and network television, the rest of us will be changing the world.

How exactly are you changing the world by posting vitriolic, knee jerk responses to an article that attempts to bring clarity to a debate that probably won't be significantly effected by your post, or the article you are refering to in the first place? The dueling analysts already know how the data can be manipulated because they are the ones doing the manipulating. Also, what on EARTH does pop music and network television have to do with anything? Neither of them were mentioned in the article, the post on slashdot or any of the responses to the post that I'v read as of the time of my post.

Ahhh, atribution.

[twitter]

Sorry guys, the "Pro-Microsoft Press" is as much a straw-man shibboleth as "Main Stream Media's Liberal Bias". Give me a break! How many analysts out there saw the Zunes Microsoft unveiled last fall and actually predicted a success?

Shibboleth, I'm not sure what you mean by that.

Straw man, I understand but did not see one in the article. They were careful to attribute the source of pro-Zune/M$ buzz to several very misleading stories by NPD and Steve Ballmer. They then flay those stories to show how they are misleading.

do we really need a pro-mac blog to provide a multi-part essay on why the Zune is not a success?

Sure, Zune tanked but that's in part because of bloggers tweezing reality from BS. Microsoft made a second rate device and tried to push it as "the best ever" and likely to succeed because of M$'s usual market might. When it did not sell because everyone knew it was a turd, they made up numbers to say it was selling. Because of the net, Zune has the reputation and sales it deserves.

roughly drafted

[zyzko]

Can we please have an own category for roughly drafted stories?

They are sometimes interesting but for the most part I would like to ignore them for being outright false and so strongly biased that they smell like rotten apple for miles.

Re:Make it required tech journalism reading

[hcmtnbiker]

In other words, show me an analyst that predicted the Zune would be a success, and then we'll talk.

That is very true. I remeber reading an interview with the team leader of the Zune, he didn't even predict a success. His words where something close to "the phrase 'ipod killer' is a misnomer, i mean the pmp market is huge, we'll be happy with as little as 5-10% of it." Don't go preaching "A Microsoft Failure" when thier attempt wasnt even to kill the ipod, but simply increase thier revenue on a growing market.

As for "Apple vs PC"... Mac holds a very powerful niche in the PC market, they may only hover arround 5% of total market share, but they make some nice money doing it. Secondly why is Apple trying to say Macs anrt PCS? If they're not "personal computers" then wtf are they?

Anyways, a blog that's whole purpose is anti-M$ and pro-Mac, might be fun for /. readers, but really holds no ground. For thier "PC vs Mac: Cost" page they include things like:

Seven years of AntiVirus 2000 $50, plus $30 for six annual updates = $230
"Spyware and security cleaning by Geek Squad: a $200 annual servicing over seven years = $1400" and for mac:

No antivirus needed No spyware cleaning needed
Now I dont know about you, but i've never seen a Mac without Symantec installed on it, and I dont know of a single person who has ever used Geek Squad, IMHO if you need Geek Squad you dont deserve to opperate a computer anyways, and that $1400 you blow on them is your own fault.

Biased towards Apple?

[MaWeiTao]

This is an interesting article and I generally agree with what has been written. However, they make a few statements I'm very skeptical about. I get the impression these guys are biased towards Apple.

Maintaining a PC costs professional users around five times as much as a Mac.

It's possible a PC may cost more than a Mac to maintain, but 5 times more? I work in design, so I've been around both Macs and PCs in a professional environment for quite a few years now. In that period of time our Macs have been replaced far more often than PCs. In the 8 years I worked with this one company Macs were replaced 5 times. They started with old Power PCs, moved on to first generation iMacs, hoping to save some money. Those were replaced in about a year by G3s, then came 2 generations of G4s and most recently Intel-based Macs.

In that same period of time the PCs have been replaced 2 to 3 times. The first upgrade in the same period of time was for IBM machines. Maybe 3 or 4 years later they were replaced by Dells and some of those were replaced by more recent Dell machines. Interestingly there are still a handful of those old Machines around the office being used, not on a regular basis, but they're around. The old Macs are all long gone.

I suppose on a per machine basis a Mac is cheaper. Macs aren't held onto as long and they aren't really upgraded. Many of the PCs in the office saw at least one OS upgrade, at first from Windows NT to 2000, and then to XP.

1. Apple extends support for older machines far longer with its operating system software.
2. Older Macs are faster running a newer version of Mac OS X; older PCs can't even run the latest Windows.
3. It is easier to support and maintain older Macs; older PCs rapidly become more expensive to maintain.
4. Older Macs retain a high resale value, older PCs actually have a negative value after the recycling fees.

In the design industry, which is one of the biggest users of Macs, this is quite common. Design companies replace their machines quite often. They often have no choice, and for exactly the problems that article claims afflict PCs.

Apple doesn't extent any support for old systems. It doesn't offer any support for any old products. Once an Apple product has been replaced by a new model you're out of luck. Of course, there's a good support community out there for older Apple devices, but Apple can't take credit for that. Anyone running OSX 10.3 or older wont be getting any updates any time soon.

Older Macs don't run more recent versions of Mac OSX very well. I've experienced this first hand. Even a 3 year old Mac can have difficulty running OSX 10.4 consistently well. A 3 or 4 year old PC can handle XP with no problems at all. Vista is the exception. But then Macs had similar problems when OSX was released.

And then there are the countless times I've been unable to run applications because they were coded for a more recent version of OSX than I was running. And I don't get backwards compatibility people claim Windows lacks and Macs support.

Even with the OS9 environment in OSX old applications don't necessarily run, and that's assuming that environment is even installed. In Windows I can even run many DOS-era applications.

Old Macs are difficult to maintain without the afore mentioned Apple community. Old PCs are exceedingly easy to maintain and similar support communities exist. And why is resale important? I can't think of anyone who's ever sold an old computer. I've seen a lot more interest in old PCs than old Macs which nobody wants if they're 4 or 5 years old. I believe, however, that PCs have a low resale value. PCs are much cheaper than Macs, why spend the money on an old PC when for not too much money a person can buy a new one.

The article also puts forward a few assumptions they can't really prove. One more absurd one being that most PC users will go out and buy a new PC instead of having the current one services. I'

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:Who is redrum?

[imroy]

"redrum" would appear to be Daniel Eran, the owner of roughlydrafted.com. The people over on digg.com have accused him of spamming Digg with his articles and then using sockpuppet accounts to 'digg' his stories (and only his stories) to get them on the frontpage (or however it works on Digg). When this was found out, he was banned from Digg and he took this personally. In his deluded mind this is a conspiracy against Apple by pro-Microsoft minions. He even has people email Apple asking them to set up a "pro-Apple" competitor to Digg. Daniel Eran is a sycophantic Apple fanboy of the worst kind.

Mixed Metaphore

[alexhmit01]

Drinking the Kool-aid refers to a cult whose leader had them drink the poisoned kool-aid and they died. Drinking the Kool-aid means that you believe in the leader on faith, originally from the phrase "don't drink the kool-aid" from the Jonestown masacre.

Sugar-water is Apple specific. When Jobs lured John Sculley from Pepsi, Jobs asked Sculley, "Do you want to sell sugar water for the rest of your life, or do you want to change the world?"

Hence the Sugar Water and "Change the World" quotes are Apple quotes, and have nothing to do with the Kool-aid quote you are referring to.

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:Am I the only one...

[Lars T.]

It is kind of irrelevant to the Zune/iPod debate, but the Mac marketshare is pretty important. If Macs had, say, a 50% marketshare, a lot more software would be developed for OSX (and probably less for Windows). Of course people who actually have a clue know that the Mac marketshare is pretty misleading in that regard, as long as A) the "market" includes PCs used as cash registers and similar things nobody ever buys any software for but what it shipped with, and B) that Mac users tend to buy more software than PC users.

DECS (Daniel Eran) submitted this story as redrum

[MojoStan]

"redrum" would appear to be Daniel Eran, the owner of roughlydrafted.com. DECS's Slashdot User page (scroll to bottom) shows that DECS (Daniel Eran) submitted this story. DECS has also sucessfully submitted (got accepted) six other stories that pimped his own site, roughlydrafted.com. It appears that Daniel Eran entered "redrum" in the "Your Name" field of the Slashdot Submission page, but DECS's user page reveals the true submitter of this story.

The people over on digg.com have accused him of spamming Digg with his articles and then using sockpuppet accounts to 'digg' his stories (and only his stories) to get them on the frontpage (or however it works on Digg). When this was found out, he was banned from Digg and he took this personally. Daniel Eran's shenanigans have actually been covered on Digg:

• PROOF that Roughly Drafted is SPAMMING/Gaming Digg with multiple accounts (97 diggs)

Photographic evidence of AlexaW and RoughlyDrafted gaming Digg just to get moron Daniel Eran's articles to the front page. (Where they promptly get buried for being inaccurate.) Several users who ONLY digg AlexaW's submissions, all of whom signed up in the last 3 weeks. Coincidence? Not a chance. This needs to be stopped immediately. More on Daniel Eran:

• RoughlyDraftedBUSTED
• RDMBusted2
• Greenpeace response to Roughlydrafted