Stop Making Up Business Metrics

Dennis O’Donnell posts an evergreen tactic in the field of commenting on the iOS/Android competition: make up novel, meaningless business metrics that Apple does well at.

Let’s go down the list here:

O’Donnell starts by noting the actual real business metric that looks a little scary for Apple: their market share in the tablet space has shrunk from 90% in 2010 to 30% in 2013.  You will note that you have in the past heard of market share and cared what other company’s market share is, and that losing 60% market share in three years is indeed a bad thing.

O’Donnell continues with:

Apple sells more iPads in 3 days than its largest competitor sells in 2 years

And your response is:  Who cares?

If their market share is 30%, why is it any better for them to be dealing with lots of smaller competitors rather than one bigger competitor.  If their market share is 30%, why does it matter if their sales spike around “event” weekends instead of being spread evenly around.

Would anyone think that Apple was doing worse if it sold exactly as many iPads as it does now, but instead of having a big spike around a new event, it sold less the weekend right after its events, but more then month after its events?  No.  Of course not.  Because market share is a real metric, while “comparing your sales spike to one particular competitor” is not a real metric.

Next up:

Apple’s unit sales growth alone is higher than Samsung’s total annual sales

Again, it’s no better for Apple to be facing lots of smaller competitors versus one big competitor.  If some new competitor entered the market and cannibalized half of Samsung’s total sales and 10% of Apple’s total sales, Apple’s sales would look even bigger compared to their biggest competitor.  That doesn’t mean that losing 10% of their total sales would somehow be a good thing for them!

So, say this year Apple’s market share is 30%, and the other 70% is split among 7 competitors with 10% each.  Apple is three times bigger than its biggest competitor!

But now say next year, Apple’s market share is 20%, and the other 80% is split among 16 competitors with 5% each.  Apple is now four times bigger than its biggest competitor — that doesn’t make losing 10% of its market share a good thing.

Now for the real doozy:

If tablet manufacturers were compared the same way PC manufacturers were in the late 90′s and early 2000′s, Apple would be an unprecedented market leader, even at 30% market share

This metric compares Apple’s market share of 2013 in the tablet space to Compaq’s market share in the tabletop computer space in 2000.  Why?  Nobody knows.  I bet Apple’s tablet market share in 2013 looks pretty good compared to a Bavarian apple orchard’s share of the apple market in 1761, but how is this relevant to anyone in the entire world?

Taking a step back from O’Donnell’s article in particular, note this entire trend.  People with a vested interest in making a company seem powerful are going to be able to find some way to compare two numbers and have their favored company have the higher number.  Ask yourself whether it is even theoretically possible that this new, made-up metric has a ton of predictive power that all analysts in history so far have just missed — or is it just a puff piece to make the chosen company look good?

Do you care how General Electric’s market share of dishwashers in 2013 compares to Ford’s market share of pickups in 1989?  No?  Then you probably don’t actually care how Apple’s share of the tablet market in 2013 compares to Compaq’s share of the PC market in 2000, either.


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