In March we posted a report titled "In the Real World, Apple's iPhone and iPad are Still King." In that report we clearly stated that "In the real world, Apple's iPhone and iPad are still king in their respective categories. Nothing has changed except for the press's view of the world. The established press has created this grand consumer mirage that's a true disservice to the overall market. The press is mentally stuck in using a "volume" of cell phones metric as a measurement of technology leadership. They use Samsung's entire fleet of junky phones regardless of their technology worthiness and compare them to Apple's two technologically advanced iPhones, namely the iPhone 4S and 5 models. Seriously, these mainstream writers have decided to dumb down reality to support this mirage that they've created." Yesterday, a former financial advisor John Kirk writing for Tech.pinions published a truly great article called "Android's Market Share is literally a Joke." It's a must read for anyone with a scintilla of common sense.
Kirk starts off with a little humor to drive home his point that the statistics that are being bandied about in the main stream press and blogosphere concerning Apple's poor iPhone market share equating to Android smartphones being the new king of the market is void of common sense when you consider that the bulk of profits are being enjoyed by Apple's iPhone.
Kirk's Joke: Have you heard this one?
"Two farmers bought a truckload of watermelons, paying five dollars apiece for them. Then they drove to the market and sold all their watermelons for four dollars each. After counting their money at the end of the day, they realized that they'd ended up with less money than they'd started with.
"See!" said the one farmer to the other. "I told you we shoulda got a bigger truck."
Or how about this one?
Android is winning because they got a bigger truck.
The Joke is On Us
Kirk states that "Both 'jokes' are based upon the old saw that one can lose money on every sale but make it up in volume. Unfortunately, the joke is on us because this is exactly the kind of nonsensical analysis that is being doled out by tech pundits and lapped up by the press and investors. You think I'm exaggerating? Take a gander at some of these recent tech headlines:
01: Android is crushing Apple and Microsoft in the mobile device market
02: Android looks like it's winning
03: Chart of the Day: The iPhone's Market Share Is Dead in the Water
04: Harvard Liquidates Apple Stake After IPhone Sales Lose Steam
05: How Apple Is Losing Mobile
06: Nearly 75% Of All Smartphones Sold In Q1 Were Android
Kirk concludes his first section by stating that "In other words, pundits think that Android has won because they "have a bigger truck" (i.e. more market share) – regardless of how much – or how little – profit Android manufacturers make. Android, the pundits opine without a hint of irony, is not making much, if any, money but that's okay because they're making it up in volume."
Kirk's report intelligently strips the entire Android volume storyline down to the bone with varying examples to make the case that volume without profit isn't much to brag about. At one point, Kirk uses sporting examples to make his point crystal clear for everyone trying to understand that sales volume alone without profit is useless.
Kirk states that "scoring by market share alone and ignoring profit is like saying that a baseball team won because it had more hits when the other team scored more runs. Scoring by market share alone and ignoring profit is like saying that a football team won because it gained more yards when the other team scored more points. Scoring by market share alone and ignoring profit is like saying that a hockey team won because it had more shots on goal when the other team had more goals."
If that's still not clear enough for you, Kirk painstakingly goes through various examples of communicating the very same message with segments such as: "The Wrong Way to Calculate Who's Winning; The 'Fair-Share' Way To Calculate Who's 'Winning'; Market Share or Profit Share; Less Market Share Can Be Better Than More, and lastly, Price Elasticity."
If you have the time in the next few days, you should read Kirk's article that's one of the best ever written on the topic that basically boils down the argument of marketing propaganda of product volume vs. product profitability.
I'll end the way that I started. In March we reported that, "the main stream press has created this grand consumer mirage that's a true disservice to the overall market. The press is mentally stuck in using a "volume" of cell phones metric as a measurement of technology leadership. They use Samsung's entire fleet of junky phones regardless of their technology worthiness and compare them to Apple's two technologically advanced iPhones, namely the iPhone 4S and 5 models. Seriously, these mainstream writers have decided to dumb down reality to support this mirage that they've created."
At the end of the day, the view held by the main stream press about Android being the market leader based on statistical volume alone is a sham. Did you hear the joke about the two farmers?
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