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[January 09, 2014]
Three graphs to stop smartphone fans fretting about 'market share'
(Guardian Web Via Acquire Media NewsEdge) Recently I wrote about how easily people confuse "market share" (the proportion of sales) for "installed base" (the number and proportion of devices in use) - and in particular why the global figures quoted for Android smartphone shipments don't necessarily translate into the same on the ground.
For example, while smartphones running Android (with and without Google services) made up roughly 80% of shipments in the third quarter of 2013, in the US they're only around 50% of the smartphones being used.
There were some comments suggesting that latter fact was because the market share - that is, the sales - of Android and iOS phones were in roughly that proportion in the US specifically, but gigantically in favour of Android worldwide. We'll have a look at that in a moment.
Separately, there were cries of joy from Windows Phone backers this week when the latest market share (= sales) figures from Kantar ComTech showed that in the three months to the end of November 2013, Microsoft's smartphone platform had achieved more than a 10% share in a number of markets - notably the UK (10.8%), France (12.9%) and Italy (16%), to give it a 10% share for the first time in the "EU 5" countries (UK, Germany, Italy, France and Spain).
But installed base? That's surely another matter. There aren't any public data for installed base of different mobile platforms in Europe, but ComScore has been publishing them for the US since September 2009. Its latest release came out on Monday, and showed that in terms of smartphones in peoples' hands, Android has 51.9%, Apple has 41.2%, BlackBerry has 3.5%, and Windows (Phone) 3.1%. The figures are for consumers, so don't include corporate devices. As with Kantar, ComScore's figures cover the three months to tne end of November 2013.
So what happens if we compare the "market share" (sales) figures from Kantar with the installed base figures from ComScore? I've collected the Kantar sales figures going back to October 2011, and if you graph the data for the US, it's pretty dramatic: Look at that! Sales of iPhone are up, they're down, Windows begins bubbling - it's everything you could want in a horse race. (The reason for the lines at each January will be clear in a moment.) And now let's look at the comparison of "market share" (sales) and "smartphone installed share" - the latter being ComScore's data of how the share of the installed base (ie the relative ratio of Android/iPhone/BlackBerrys/Windows Phone in peoples' hands).
The purpose of the lines is to show you how the graphs align. When you look at the installed base share, the drama is suddenly gone. You can just about make out little changes, but they don't seem to match that well with the "market share" figures. It's not as exciting at all.
But if you think that looks dull, look at it when you take into account that the entire installed base of smartphones is growing - so that a few percent share in 2013 means many more users than it did in 2012: The lines show how the timescales match again. So now? No discernible drama at all - just a couple of lines remaining roughly parallel going up, and two lines at the bottom on a collision course. For developers and everyone considering what platform to target, it's that bottom graph - not the top one - that is the important one. Android and the iPhone own the US market; BlackBerry and Windows Phone have just 6%, which makes them almost a rounding error. "Market share" stories are exciting, but they often fail to capture the reality on the ground.
One other point: the Kantar figures don't give any indication of the relative size of sales from quarter to quarter; they're all scaled to 100%. So if, for example, the summer months see a dip in total sales compared to Christmas, then the drama of the "market share" story could be exaggerated even further. (I've asked Kantar if it will provided an "indexed" figure, but so far it hasn't. It probably reserves these figures to its paying clients, as is its right.) The conclusion? As before - don't put your belief in market share numbers. When Nokia had a 63% market share of smartphones (back in the third quarter of 2007), the entire smartphone market comprised just 17m handsets for the quarter. These days, you'd get that many Android handsets sold in a week. The reality is that the only people to whom market share matters is the people who sell the stuff, and they're probably more focussed on total numbers - and profitability.
Ask for the hard data. And remember that the diffusion of technologies in large markets, such as entire countries, tends to happen very slowly - and certainly not in a few months.
(c) 2014 Guardian Newspapers Limited.
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