"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.

"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.

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

[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: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: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.

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.

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.