I genuinely love the industry analyst business. I love the role we analysts, our data, and our commentary play in helping companies make strategic decisions. However, I’ve noticed a disturbing trend. ((It’s a “Jump to Conclusions” mat! You see, you have this mat, with different CONCLUSIONS written on it that you could JUMP TO! — Tom Smykowski from the movie Office Space))
The challenge with data is that the truth lies in the interpretation. Without context genuine data can lead to disingenuous conclusions. This is why data cannot be put out in the public without context. Yet this is exactly what happens. It creates a scenario where a media industry who thrives on negativity can take genuine data, miss the context, and create stories around a false narrative. It is not their fault entirely. It is the fault of the data firms who release data to the public, without proper interpretation or context, and allow the media industry to draw their own conclusion, and often a false one.
Genuine data should point out market truths. However, when presented in the wrong way, it has the potential to do just the opposite.
Why We Count Things
The bottom line is data matters. If you are a company that makes touch-based displays or sensors you need a fairly accurate view of shipment growth related to the areas you care about so you can plan your long term product cycle. If you are a company that makes screens you don’t necessarily care what the operating system market share is of specific platforms. All you care about is how many screens will be sold over the next few years, and what the likely segment mix of screen size will be. For you, the data matters because you need to know how many to make. This is why forecasts and segment tracking statistics are relevant.
Data, forecasts, and other statistics, should help reveal an opportunity to the interested party. It should also help point out where there are not opportunities.
Not all data that gets put out in the public leads to disingenuous conclusions. However, it is the market share statistics that do so more often than any other. To make my point, and highlight how this happens, I will use the tablet market share narrative as an example.
The iPad Has Lost to Android
When you track the global sales of tablets, it is easy to look at the market share statistics and say that it is game over for the iPad. You can stare at the chart and conclude that the iPad can no longer grow as the world and the growth shifts to Android. There is some truth to the global statistics of Android’s tablet market share. At face value we create charts that look like this:
That is genuine data. Android is being shipped on more tablets than iPads. Therefore, the narrative that Android tablets outsell iPads is accurate at a bullet point level. However, the graph does not tell the whole story and yet so many are left to conclude it does.
If you are a software developer ((Software developers are ones for whom a market share discussion does matter. Perhaps the investment community does also but at large it is irrelevant for most.)) you will look at that chart and say “I should be writing tablet apps for Android.” The problem is… that is an incorrect conclusion when you have the context of the market share data points.
The picture starts to get more clear when we look at the market share of each vendor as a makeup of total sales. Here is that chart. ((Graph viewed with a stack chart. ))
When we look at that chart we realize that the name brands shipping Android tablets are not shipping nearly as many as the iPad. We will also notice that the largest segment of Android tablets being sold come from this category labeled ‘other.’ Upon learning that ‘other’ makes up a significant portion of the number of Android tablets being sold; we must seek to understand what ‘other’ is and ask if it represents the same opportunity as the vendors who are shipping Android as a tablet platform tied to services and app stores.
The category ‘other’ represents the no-name brand white-box tablets being sold at razor thin margins mostly in China and other emerging markets. Here are some visuals to help with some context.
I wrote about this point in particular where I dug into the gray market for tablets in China. It is a big market.
As I have been digging into the white box segment–which makes up the bulk of Android tablet shipments–I have been trying to understand what consumers are doing with these extremely low-cost devices. As we know, Android tablets globally make up a minuscule share of global web traffic. The latest estimates I saw peg Android tablets at less than .08% of global traffic while iPad is at 4% of global internet traffic. This has always been the stat that has caused us researchers to raise an eyebrow. Android has more volume but significantly less internet traffic. So what is happening?
Nearly all evidence and data we find comes back to a few fundamental things. First, most of these low cost tablets in the category of ‘other’ are being used purely as portable DVD players, or e-readers. Some are being used for games, but rarely are they connecting to web services, app stores, or other key services. I have asked local analysts, local online services companies, app tracking firms, and many many more regional experts, and the answer keeps coming back the same. They affirm that we see the data showing all these Android tablet sales. But they aren’t actually showing up on anyone’s radar when it comes to apps and services in a meaningful way.
Understanding the context, it is hard to genuinely conclude that ‘other’ represents an opportunity for anyone but the white box hardware companies making less than a dollar of profit and component vendors who can supply the parts to make such low-cost tablets. It is certainly not a genuine revenue opportunity for app developers, services companies, or other constituents in the food chain. And other makes up almost 40% of the Android tablets shipped world wide.
So let’s look at the chart without ‘other.’
Now we get a slightly clearer picture. If we eliminate ‘other’ Apple’s tablet share goes to over 50% WW with the closest competitor being Samsung at 18%.
Yet we are still left with a legitimate question which is relative to vendor growth. ‘Other’ is causing a downward trend for the competition. We know that ‘other’ was growing but ‘other’ is not an area any branded hardware OEM wants to go near. So, can vendors grow their share in a growing market against other? That is the key question. To shed insight into that question a little more context is necessary.
Our research, and many others, suggests that over half of first-time purchasers of low-cost tablets had buyers remorse and intend to spend up on their next one. This is why with many of the latest branded crop of OEM tablets, prices went up in order to invest in better components to better the experience.
Our research also suggests that those in the market for a tablet–who plan to use it to do meaningful things for the value chain–prioritize the experience over price. The tablet market as a whole is growing and I tend to view that growth separately from the ‘white box’ category. ((There is likely some percent of ‘other’ that does represent an opportunity, however, we have no idea how much. My suspicion is it is very small so I lean toward leaving it out entirely.)) Doing so brings much more clarity to what is happening in the market for the stakeholders.
We are still waiting for updated figures on these but I wanted to add the needed context about what is happening in the tablet market so that accurate opinions, and more importantly accurate business decisions, can be made with regard to this category.
A similar analysis can be done on the market for smartphones, but I will leave that project for another time. Data is good. But it is dangerous when it is released into the public without context. Data should inform not confuse. Yet, more often than not, data that gets thrown around in the public sphere clouds the truth rather than brings clarity to it.