"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."

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!

Make it required tech journalism reading

[vingt]

I'd like to see this become required for all those choosing to write in the field of tech journalism, be they pundits, journalists, bloggers, thinktank members or any other name.

[ The examples were fun, too - Microsoft, Walmart, RIAA and the 70s? I thought "one of these things is not like the others" :-) ]

"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: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.

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.

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 [wikipedia.org], 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: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.

Re:Make it required tech journalism reading

[Anonymous Coward]

Secondly why is Apple trying to say Macs anrt PCS? If they're not "personal computers" then wtf are they?

Because "PC" has come to mean "Windows box."

i've never seen a Mac without Symantec installed on it

Have you seen any Macs since the OS X release?

Re:"Myth busting" with undocumented assumptions?

[SnowZero]

I did read it. Another thing he says is that once a PC has Linux on it, it doesn't count and its beyond its useful life, because it no longer contributes to the software market. So, even though the PC is still around, it doesn't count, while the Mac does, even if it hasn't had a software upgrade in several years. What does the software have to do with the hardware anyway? His assumption also means that all of my computers had a "useful life" of one day, since I installed Linux on them. So, he's fighting myths and massaged numbers... with his own massaged numbers and broken assumptions, often conflating hardware with software.

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'

And ?

[Space cowboy]

it refers to the hypocrite nature of Apple, a hardware company positioned as the single largest platform for distributing digital media, who locks down its devices so that only they may sell content for those devices, while promoting the image that they are empowering users with superior software and literally changing the world.

I'm guessing you mean hypocritical rather than hypocrite, but I'm not sure because I can't see a conflict between those two statements...

the single largest platform for distributing digital media, who locks down its devices so that only they may sell content for those devices.
  - Well, not quite, you can load media from just about anywhere onto 'those devices' (assuming you mean ipods). They also have their own source (iTMS) that *does* only work with iPods, but hey - that's the same as all their competitors, and why shouldn't they offer that additional service ?

while promoting the image that they are empowering users with superior software and literally changing the world.
  - The software that every Mac comes with does indeed genuinely add value to the average person's computing experience. The whole "changing the world" thing is more about letting people who *aren't* technical (and here I usually envisage my sister) getting more out of their computers, by employing good design, and paying attention to details that others overlook.

To give the traditional anecdotal "evidence", my sister flew into florida, found an open WiFi network at the airport, and video-conferenced me (using iChat) here in CA, all with the standard s/w that comes with the machine. Her boyfriend bought her a PC notebook for her birthday last year (in October). When I mentioned (close to Xmas) that that was a shame, because I had been going to buy her a Macbook, she said "oh, no, please get me the Macbook. One of my friends has one, and it's so much easier to use than mine". One Macbook (and somewhat annoyed boyfriend :-) later, and she's video-conferencing me...

We've even done a 3-way chat (her in Germany, my parents in the UK, and me in CA), which was pretty cool... so I dunno about changing the world in general - that's a nice goal. It certainly changed *her* world, and for the better.

So, even if both of your premises were true (the first isn't, as explained above), I can't see why Apple should be "hypocrite"; the two statements simply don't have any bearing on each other.

Simon.

Re:Most interesting part

[alexhmit01]

Why marginal costs matter. Apple develops OS X and Microsoft develops Windows REGARDLESS of costs. When Apple sells and iPod for $300, they generally spent $200 on parts and sales costs. So while their top line (revenue) goes up by $300, their gross income (revenue - COGS) only goes up $100. While revenue is interesting, a company has to pay all it's expenses out of gross profits. When Microsoft sells a Copy of Vista for $150, the marginal costs (COGS) is pretty close to $0, but for retail is probably $25 or so (packaging, shipping, tracking, etc.). So while their revenue went up $150, gross profits went up $125. Basically, for $300 in revenue, if Microsoft's gross margins are 5/6th, and Apple's are 1/3rd, then Microsoft is doing MUCH better off the same sales.

Now, investors care about Net Profits, after paying for everything. But the company (internally, non C-level employees) cares about gross profits, because that is the money that is available to pay salaries, etc. However, market analysis of businesses normally looks at revenue, because while it isn't a meaningful number, it's the hardest to fake, and analysts normally assume that companies in the same market have similar margins.

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.

Re:"Myth busting" with undocumented assumptions?

[toddestan]

Both Mac and PC hardware lasts a long time, and the service life boils down to just how long you want to keep them running. Which is his point, PCs are dirt cheap, especially used PCs, so why bother with old PC systems running when a replacement is cheap?

And last time I checked, OSX has been getting slower over the last couple of years. You probably don't notice it on newer systems, but the added bloat of features like Spotlight and Dashboard have really been putting the crunch on older systems, especially if they have low memory and/or slow harddrives.