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Startups and established companies alike measure success using a variety of metrics. One of the most popular, of course, is market share. And for good reason: if you control a large chunk of a particular market, it would seem that you're doing something right. And there's the fact that impressive-sounding  market share figures make for great PR fluff.

But is market share all that it's cracked up to be? According to an interesting analysis of the mobile phone market conducted by Asymco, the answer might just be 'no.'

In comparing market share, sales and profit figures for the top eight mobile phone vendors, Asymco has quantified an interesting fact: Apple controls less than 5% of the market, but has over half of the profit.

The global popularity of the world's most recognizable smart phone -- the iPhone -- is, of course, responsible for this interesting situation. Few companies, of course, particularly those in large, competitive markets, can claim to have an iPhone-like hit. But that doesn't mean that Apple's market share versus profit share figures don't offer a lesson. They do.

That lesson: it's not how much of the pie you control, it's which part of the pie you control. Some slices are more filling than others, and companies can beat out the competition even if the competition controls a larger portion of the market.

For companies selling products, like Apple, building the right products can be better than building high-volume products. For service providers, having the right clients can be better than having more clients.

All of this, of course, is common sense. But common sense isn't always so common. Market share is still a popular metric from the C-suite down to the marketing department, and companies often place heavy emphasis on acquiring as much market share as possible.

In reality, Apple shows us that aspiring to control the most profitable segments of a market is often a more fruitful approach, even if it's far more challenging.

Patricio Robles

Published 1 February, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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UK Mobile Broadband Deals

Maybe, but the analysis here is slightly misleading. You're comparing Apple's market share across the whole mobile phone market - meaning you're comparing $600 iPhone sales with $15 talk and text phones in Africa, you may as well say the iPhone has only 1% of the consumer electronics market but a massive share of the profit. You need to compare like with like and show what share of the high end smartphone market they have (where all the profit is) and what share of that profit they have. It will still be impressive, and your point is still quite valid, but not quite as much as you've made it appear.

over 5 years ago

Vincent Amari

Vincent Amari, Online Consultancy at Business Foresights Ltd

Also beware: When you have a smaller market share and something goes wrong, your profits also drop much quicker than anybody else :-)

over 5 years ago

alex avery

alex avery, Inbound Marketing Consultant at Alex Avery Inc

What Apple has shown is that conspicuous/aspirational consumption is alive, well and profitable. Their products are not better. Their service is not better. Fact. With increased competition, including other aspirational brands (Facebook phone anyone?) Apple could easily have their legs cut out from under them. That, and without Steve Jobs, Apple's share price is more risky than eating off a Mexican prison toilet floor. You read that right.

Time will tell, but Apple could easily become the next Sony or Pioneer. Yesterdays conspicuous/aspirational brand of choice.

Time will tell.

over 5 years ago

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Jason DaPonte

It's also worth noting that iPhone users, on average, use far more data than any other smarthphone OS user. This means they're consuming more content and services and therefore more likely to generate revenue. Blackberry users use lots of data but it's mainly for messaging.
<p>
Many of the phones that Android is being put on are still being used as "just phones" (for calls and texts) and not "smartphones."
<p>
From what I've seen, looking at market share isn't hugely helpful in looking at targetting mobile audiences and consumers - you need to look deeper into the behavioural data to figure out who's using which platforms for what reasons and design from there.

over 5 years ago

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James Hirst, European Business Development Manager at Clear

Where Apple and iPhone in particular seem to have got it right is to create desire amongst consumers.

At Clear, the brand marketing consultancy I work for, we have just conducted some interesting research on Brand Desire. Looking at what brands consumers most desire and why.

In the UK the iPhone (perhaps unsurprisingly) comes out on top. We asked consumers numerous questions including

A brand I like to talk about
A brand I would love to use in the future
A brand I think of as great
A brand I’m proud to be seen with

And the iPhone over indexed in all of them.

Internationally, we benchmarked the performance of the Brand Desire top 100 (in which Apple in its own right came out on top) against the STANDARD & POOR’S 500, all brands deliver a higher return on investment, as well as a higher growth in share value.

so, judging by our survey results which show strong desire creates strong demand, and strong demand creates growth, it seems that unless something radical happens Apple should be okay for the foreseeable future!

over 5 years ago

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Martin Rabl

Pie charts and market share can lie and be used to show success or failure for whoever tries to interpret them. Not saying that there is never any truth in them but if it comes down to getting the most out of it then I see your point.

If there are 10 cookies for 3 persons but only one actually tastes fantastic, all the others are mediocre at best, disgusting or even poisonous you are best of taking the one good one.
Apple in that case has 1 pick, the other two 'persons' have 5 or 4 picks but Apple goes first and thanks to fantastic research they know how this fantastic cookie looks like without trying it before.
Their problem starts when they don't have the first pick anymore or their informational advantage is lost. Someone else might steal that cookie before them or they pick the wrong one.

over 5 years ago

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Tom Atkinson

Did you factor in revenue from App Store? That is a pretty huge part of the iOS equation. Also Android users usually tear through about 3x the amount of data as an iPhone. I know - I switched from iPhone to Android and I slammed by GSM account using 100MB in about a couple of days. I never used to hit my cap and gets warnings from my telco when I used an iPhone. Actually I didn't use the iPhone much, cos I only use phones with QWETRTY keyboards. Main gripe with Android - putting an exit or quit feature into all apps doesn't appear to be a requirement... hence why I used Advanced Task Killer to close programs.

over 5 years ago

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