Every successful business has a set of basic metrics which help to determine the company’s success in the marketplace. You would think that profit and loss would be the numbers most touted by business analysts but that is not always the case.
Shareholder value– a company’s stock price– is another metric to consider. A company can be valued far beyond revenue and profit growth. Oddly enough, the one metric you read about and hear about the most in the technology industry is marketshare.
Wherever you read or hear about marketshare stop and think about unicorns. They have about the same value. Marketshare as a valuable metric is a myth, yet whenever Apple and Mac and iPhone and iPad are mentioned and compared to competitors, marketshare is sure to follow.
When it comes to Apple, marketshare is almost worthless.
First, nobody anywhere knows an exact marketshare of any product– at least those that compete with Apple– because such numbers are guesstimates. Even Apple no longer publishes unit sales for major products, and that means any marketshare number you read or hear about is at best a guess, and relative to a few other metrics, perhaps the least valuable.
What metrics are more valuable than marketshare?
Second, I could say something like, “All of them” and get away with it, but there might be a few that are important to Apple that are less important to a competitor. Shareholder value is important. So are revenue and profits. One that seems overvalued to me– at least in the U.S. stock market is growth, including revenue, profits, and, alas, marketshare.
How can you measure a company’s health? It ain’t marketshare, folks. That’s the unicorn. Nobody knows what it is. What about revenue and profits? Apple’s revenue for every major product is enormous, but even more outsized– especially when compared to competitors– is profit. The guesstimators put Apple’s iPhone revenue share at nearly 60-percent of the entire smartphone industry’s combined revenue. Likewise, thanks to larger than life gross margins, iPhone comes in with almost 75-percent of the entire industry’s profits.
Samsung gets the majority of Apple’s leftovers, so what does that tell you about the rest of the industry. Huawei may manufacture more smartphones than Apple but guess which company is the most valuable and makes the most money?
Apple has a similar standing with Mac, iPad, Watch, headphones, and even the grab bag that makes up Services. Mac marketshare is barely double digits, but the Mac owns nearly 50-percent of the entire personal computer industry’s profits; and an outsized proportion of revenue (perhaps 25-percent). Those numbers become massive when the iPad is considered a PC. Combined, they make Apple the largest personal computer manufacturer.
Simply put, the value of marketshare as an important metric is a myth. When you hear it touted, hear it mentioned, or read it, ignore whoever is using it because they don’t know what they’re talking about. For the most part, marketshare does not mean diddly squat.