Archive for July, 2011

On Flawed Market Research

There is a particular report that was recently released and has been heavily promoted through various publications. What I am referring to is a report by Strategy Analytics in which they claim that apparently Android has well over 30% of the tablet market because of some numbers that they collected. This post is not a rant about how iPad has a lot more than 65% of the market. Arguing about that is just silly. What this is about is how most companies collect statistics on business performance without even considering what it is that they are counting. Don’t get me wrong, it is not an easy problem and it’s made even harder by the fact that most MR companies offer relatively low salaries compared to actual consultancy jobs and hence they get employees with sometimes poor understanding of business. What blows my mind about some companies however, is that senior executives in those companies such as Neil Mawston don’t know any better and actually stand by crap like this. Oh and before I go any further I don’t know Neil and I am most certainly not associated with Strategy Analytics and never have been.

Here is the problem guys, you have collected shipment numbers for Android devices from manufacturers such as Samsung, HTC, LG, Motorola, etc. and then compared them to actual sales numbers from Apple. In a stable (read mature) market that might be ok because you can use some reasonable assumptions for inventory levels. The problem here however, is that none of the Android table manufacturers know how much they are going to sell. They are manufacturers and not retailers and the numbers that you get from them are projections of shipments based on orders that they have received or expect to receive. Well I’m here to tell you that orders get cancelled if a device does not sell well and they most certainly get scaled down. And all that is OK with the Asian manufacturers because they are used to getting stuck with unsold products. If recent months are any indication, Android manufacturers have grossly overestimated their own importance on the market. There is a clear lack of understanding the stages of product competition if you will and they have all of a sudden decided that it’s all down to competition of price when clearly the features stage hasn’t been passed. But back to the MR problem, you cannot compare retail numbers (Apple’s) with manufacturer shipment numbers (Android squad) in a growing market such as the tablet one. You have no point of reference for the growth curve of the market and trying to predict it is nothing more than an exercise in time wasting. Furthermore, without knowing what the market growth curve is, you cannot predict the difference between products being shipped and products being sold. What that leads to is an unpredictable level of inventory and any forecasts based on data like that would be extremely unreliable. Further more Mr. Mawston I very much doubt that you have any reliable information on the inventory levels that Apple keeps. In fact I know for a fact that your assumptions are wrong and also that Apple requires you to sign an NDA before they show you any performance numbers. So conclusions like “Android captured [a] 30% share of global tablet shipments in Q2 2011,” are laughable at best. Please do you damn homework and for the love of God take some MR courses if you must. I don’t know how you got to be at the position that you are at but I really feel sorry for the people that have to work under you.
Yes, a manager does not have to be the smartest person in the team, in fact you have a problem if he/she is, but a manager most definitely needs to know his/her stuff and you Sir do not!

Advertisements

1 Comment