iPad’s Actual Market Share

  • Posted: 05 March 2011 08:54 PM

    You know the drill.  Any comments/disagreements, I would be open to discussion.  I have cut the full article down a bit to fit in this post, you can get the entire post at http://bit.ly/eKYg3V


    New AAPL Orchard Post: iPad’s Actual Market Share

    Ever since Steve Jobs unveiled the iPad 2, people have busy trying to compare his statements to the truth, especially this one:

    ?Many have said (iPad) is the most successful consumer product ever launched. Over 90% market share and our competitors were flummoxed.?

    Where was Steve getting this 90% market share data point? Strategy Analytics showed iPad?s market share at 75% in 4Q10 and falling fast.

    The thing about Steve Jobs is that he rarely outright lies, instead opting to look at data in a way that he thinks makes most sense and which contains some shred of validity.  I don?t think Steve was far off from the truth saying iPad had 90% market share. Using conservative figures and assumptions, I calculate iPad?s tablet market share at 90% in 4Q10, and nearly 95% for 2010.

    However, in coming quarters, iPad?s market share will fall, but not for the reasons you might think. 

    The main problem with market share data is that there is no easy way of measuring how many tablets are purchased by consumers. Instead, market research firms rely on company figures (i.e. Apple earnings reports, Samsung press releases) and other estimates to reach unit numbers that are better described as ?shipped? rather than ?sold?.  There is nothing wrong with this procedure as long as it is clearly labeled and, more importantly, the accompanying attention-grabbing headlines indicate this terminology. Instead, bloggers and reporters jump to conclusions that are often misguided and misleading.

    So why is it okay that companies report units shipped as units sold? It all comes down to accounting.

    Companies need to determine inventory and cost of good sold figures in order to calculate earnings. Sounds simple enough.  Diving deeper into purchasing contracts would show the more intricate interactions between a buyer and seller.  Without jumping into the accounting bunny hole, let?s look at Apple?s most recent 10-K:

    ?(Apple) recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of (Apple)?s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, (Apple) defers revenue until the customer receives the product because (Apple) legally retains a portion of the risk of loss on these sales during transit.?

    An iPad on a freight plane headed to a Walmart warehouse is no longer counted as an iPad in Apple?s inventory, instead it is counted as an iPad in Walmart?s inventory. Apple is able to recognize that iPad as sold and recognize the accompanying revenue (and profit).

    So how should one account for market share data with this shipped/sold methodology in mind? I support the idea that proper market share data should make an attempt of calculating how many units have been sold to consumers.  There is no exact science to this, and to a certain degree, even Apple and Samsung may not know day to day how much of its product is actually sold (although this process is becoming more efficient thanks to advancements such as Walmart?s lean inventory practices which notifies Apple soon after you buy iPad). Given the tablet market?s young age and small sales figures, we can reach market share according to units sold to consumers with a large degree of confidence.

    Let?s start with the most recent market share data by Strategy Analytics published on January 31, 2011:

    Global Tablet 4Q10 OS Shipments:

    iPad: 7.3 million

    Android: 2.1 million

    Others: 0.3 million

    According to these figures, iPad?s market share fell to 75% in 4Q10. Let us dive deeper into these numbers…..

    http://bit.ly/eKYg3V for my detailed calculations.

    Revised iPad market share in 4Q10: 90%.  For 2010, using the same procedure, I calculate that Apple sold approximately 12 million iPads, with Android selling 0.7 million tablets and 0.1 million ?other? tablets sold to consumers, giving iPad approximately 95% market share for 2010.  Steve Jobs wasn?t far off with his 90% iPad market share statement.

    With all of this shipped vs. sold terminology in mind, it is important to think about how this will impact iPad?s market share going forward. With tablets from RIMM and HP shipping sometime in the near future, and additional Android tablets like the Motorola Xoom, it is obvious that there will be more tablets shipped in 2011 than in 2010.  Running back of the envelope numbers: if Apple can ship 20 million iPads (conservative) in 2011, RIMM ships 3 million, HP ships 2 million, and Motorola ships 2 million, iPad?s market share is now down to 74% and falling fast.

    However, if we take a look at units sold, I am confident that iPad will be doing much better. 

    It will be interesting to keep an eye on how actual sell-through turns out for non-iPads. The tricky part in this whole market share discussion is

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  • Posted: 06 March 2011 02:06 PM #1

    You’re getting a lot of traction with this article Sammy. Lead of Macsurfer, reprinted on SAI…

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  • Posted: 06 March 2011 02:43 PM #2

    iOrlando - 06 March 2011 12:54 AM

    You know the drill.  Any comments/disagreements, I would be open to discussion.  I have cut the full article down a bit to fit in this post, you can get the entire post at http://bit.ly/eKYg3V

    New AAPL Orchard Post: iPad’s Actual Market Share

    Ever since Steve Jobs unveiled the iPad 2, people have busy trying to compare his statements to the truth, especially this one:

    ?Many have said (iPad) is the most successful consumer product ever launched. Over 90% market share and our competitors were flummoxed.?

    Where was Steve getting this 90% market share data point? Strategy Analytics showed iPad?s market share at 75% in 4Q10 and falling fast.

    Brilliant.

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    Posted: 06 March 2011 03:26 PM #3

    I have a feeling SJ knows much more about market share then he is willing to discuss.  Normally he would quote some independent out fit like NPD to point out iPod market share.  But in this case I suspect they have their own internal statistical gathering operation.  This data is critical for persuading developers to come on board or stay on board.

    I am not so sure it really matters if Apple has 60% or 90% market share.  This is very early in the game at this point.  Lets see where we stand in 5 years. 

    If you look at Amazon top sellers in tablets the iPad seems to have about 60% market share.  There are lots of cheaper tablets out there and more expensive models as well.  They will continue to sell because consumers will buy products for different reasons. 

    Right now I think SJ wants to really build a solid base for the iOS with iPhones, iPods, and iPads.  All three are part of a bigger plan.  So in five years when we have about 500 million iOS devices and 300 million credit card accounts and about $250 Billion in the bank, watch out.  At that stage Apple can introduce a service or a new product that can guarantee them 20 to 40% yearly revenue growth for 10 more years

         
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    Posted: 06 March 2011 03:41 PM #4

    I think it’s simpler than that. Looking at *whole year 2010*: about 15 million iPads shipped and about 2 million “others”. This results in 15/17 or 88%. He just rounded up.

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    Posted: 06 March 2011 04:16 PM #5

    I kinda wish SJ wouldn’t fudge the numbers, which is only occasionally.  “Market share” is traditionally defined by quarter unless it’s made clear, and Apple is all too happy to bring out NPD etc. statistics. 

    But yes, in CY 2010, Apple’s market share by units sold (every last one) was probably 90% or even better.  I don’t mind the confident Apple that’s increasingly showing itself, a little specificity wouldn’t hurt though to keep unnecessary criticisms away.

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  • Posted: 06 March 2011 05:46 PM #6

    asymco - 06 March 2011 07:41 PM

    I think it’s simpler than that. Looking at *whole year 2010*: about 15 million iPads shipped and about 2 million “others”. This results in 15/17 or 88%. He just rounded up.


    Sure. It’s easy going by that, but the biggest retort I have been getting in recent weeks is that iPad’s market share is beginning to decline relatively quickly heading into 2011 (as seen in iPad’s declining share in 4Q10).

    One of my goal’s was to point out that “shipped” tells a different story than “sold to consumers” and I wanted to highlight how one can quickly make the conversion on their own.

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    Posted: 06 March 2011 06:54 PM #7

    Business Insider piece:

    Where was Steve getting this 90% market share data point? Strategy Analytics showed iPad?s market share at 75% in 4Q10 and falling fast.

    The thing about Steve Jobs is that he rarely outright lies, instead opting to look at data in a way that he thinks makes most sense and which contains some shred of validity.  I don?t think Steve was far off from the truth saying iPad had 90% market share. Using conservative figures and assumptions, I calculate iPad?s tablet market share at 90% in 4Q10, and nearly 95% for 2010.

    Steve Jobs Wasn’t Lying: Apple’s iPad Market Share Was Really More Than 90% Last Year

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  • Posted: 06 March 2011 07:21 PM #8

    JDSoCal - 06 March 2011 10:54 PM

    Business Insider piece:

    Where was Steve getting this 90% market share data point? Strategy Analytics showed iPad?s market share at 75% in 4Q10 and falling fast.

    The thing about Steve Jobs is that he rarely outright lies, instead opting to look at data in a way that he thinks makes most sense and which contains some shred of validity.  I don?t think Steve was far off from the truth saying iPad had 90% market share. Using conservative figures and assumptions, I calculate iPad?s tablet market share at 90% in 4Q10, and nearly 95% for 2010.

    Steve Jobs Wasn’t Lying: Apple’s iPad Market Share Was Really More Than 90% Last Year

    How Meta…

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    Posted: 07 March 2011 12:29 PM #9

    Depends on what you call a tablet. Does a 7 inch thingi constitute a tablet. If so, why not a smaller unit. You can do a lot with an iPod touch.

    Steve’s pretty close given the wiggle room of rounding.

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    Posted: 07 March 2011 05:28 PM #10

    The tablet market is tiny. The ipad market, however, is huge - and apple owns 100% of that market.

    The tablet market will not be like the smartphone market - on this occasion there are no carriers looking for their own non-iphone solution to advertise the crap out of to combat AT&T iphone exclusivity. Plus they have little desire to heavily subsidise tablets for the relativly small revenue of data-only plans comapared to the reveune gained from subsidised smartphone voice+data+texting plans.

    And one last thing - people bought android phones because everyone needs a phone, and a lot of people figure if they are buying a phone they might as well have one with some nice extras. In my opinion, however, the general public has not yet been sold at all on the value of tablets in general, but have been sold on the value of the ipad.

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