Whether a business suffers or prospers there are still a handful of numbers which equate to both. Technology writers with few analytical skills talk about a product’s marketshare as if that was the single-most important number.
It is not. Every company varies somewhat, but I can think of at least three basic numbers that are more important to Apple than marketshare. So, when you read about the all-important marketshare numbers, or how Apple’s this or that product is losing marketshare, ignore both the writer and the analysis. Neither are worthy of your time.
Customers. Revenue. Profits.
Allow me to argue that marketshare is the least important of the numbers bandied about by techno charlatans these days. Far more important than marketshare is profitshare— the share of an entire business segment’s profits.
That’s right. Profitshare as a share of the industry’s total profits are more important and valuable than either revenue or marketshare.
Profits make the world go around. Without profits, a business cannot survive, let alone prosper. Rich companies may invest money in a new product, but if the customer base does not grow, if revenue does not grow, then profits will not grow, either. Combined, a business or new product needs a growing customer base, growing revenues, and, of course, growing profits.
Let me argue that having all three is enormously valuable to a product, a brand, and a company. And let me argue that Apple does all three better than any single competitor, marketshare notwithstanding.
First up, customers. Apple claims to have somewhere north of one billion customers on iOS and macOS. That compares favorably to the one billion or so Windows customers that Microsoft touts. It still compares favorably to the two billion users that Google claims on are on Android devices. Note the difference. Customers vs. users. Those one billion or so customers that Apple claims spend money to buy premium products, each of which may not have much marketshare, but does have higher gross margins than competitors. That’s where profits are derived.
Secondly, revenue. A growing customer base helps to generate revenue; especially so as Apple’s product line expands. 20 years ago Apple and Mac were synonymous. Then the iPod came along and Apple had a few hundred million more customers, and far more than the Mac. A few years later the iPhone was launched and now Apple has a billion iOS customers. Not just users. Customers buy something, and that results in revenue, which results in profits.
Revenue is grown as new products are added to the ecosystem. In some cases, an Apple product will have very small marketshare but a much larger profitshare. The Mac is a good example. In other cases, the marketshare and customer base is larger, but profitshare surpasses that of all competitors combined. That’s the iPhone. Watch is a different animal as it has both higher marketshare, higher revenue, and most of the smartwatch industry’s profits.
Finally, profits. Or, rather profitshare. Customers may beget revenue which begets profits, but even profitable products or companies go bust, simply because the profits were not sufficient to garner support for more investment. Profitshare is different, and no company leads Apple’s overall profitshare within various technology segments. Profitshare is a better measurement of a company’s health and well being than marketshare.
For example, Google’s Android OS does not bring direct revenue or profits to Google because the search engine giant’s business model is indirect. Android smartphone and tablet makers have the slimmest gross margins, therefore, profits are scarce. Yes, Android vs. iPhone is exactly like Windows vs. Mac. It’s an operating system vs. a hardware product. Hardware begets more revenue, higher gross margins, and staggering profits for Apple.
Marketshare? Bah humbug. Profitshare is vastly more important and Apple leads profits everywhere.