The smartphone industry is full of jargon that is difficult for non-insiders to understand. Charles Arthur at The Guardian recently posted a comprehensive explanation of a few terms that are the most confusing to casual observers, including “market share,” “installed base,” and “shipments.”
It’s easy to get caught up in headlines that point to Android phones having a dominant 80% “market share” in the global smartphone market, and Arthur wants people to dig deeper into that number by understanding what it really means, rather than take it at face value.
His article is a great read but at BI Intelligence we thought it would be useful to summarize his main points, with our definitions in bold:
1. Market share numbers are usually only a snapshot of smartphones shipped by manufacturers in a given quarter. Quarterly market share updates are not very useful on their own.
An example is IDC’s announcement Nov. 12 that phones running the Android operating system account for an 81% share of the global smartphone market.
It’s wrong to extrapolate from these quarterly market share numbers and think that 81% of phones in people’s hands are Android phones. The number just means that 81% of phones shipped in the quarter were Android devices. As Arthur explains, it’s ultimately sales that impact the installed base of devices, but most research firms and press reports actually discuss shipments.