It finally happened: market share is dead and it has been replaced by value share!

I’m sick and tired of seeing Nokia fanbois flapping their arms in the air, quoting press release statistics about 39% market share, and connecting the next billion people. The only number that a corporation, and stock holders, honestly care about is profit. Whatever market share Sony Ericsson and Motorola have is irrelevant, because they do not make any money. Market share, for the completely clueless, is defined as the number of units your company ships, as a percentage of the number of units the entire industry ships. For every 100 mobile phones sold today, 39 of them are made by Nokia, and people used to care about that number. I stopped caring a long time ago. I stopped caring when I started using smartphones. Even Nokia said, during their Q2 2009 financial call, that they’re going to switch from reporting device ASP (average selling price) to product ASP in Q3 and that this will be the new format going forward. What does that mean? If Nokia sold 100 phones, each for 100 EUR, and each of those 100 people paid 10 EUR for 3 months of turn by turn navigation, the product ASP of those units would be 110 EUR versus the device ASP, which only accounts for the hardware, at 100 EUR.

Today Brian Modoff, an analyst at Deutsche Bank, released a chart that puts market share right along side value share. It boggles the mind why this took so long to happen, but it did. What we see is that Nokia, with their 39% market share, has 60% of the profits for the mobile industry. Impressive, but not as impressive as Apple whose market share looks like an eyelash that has fallen onto the X axis of a printout of a bar graph, yet is responsible for 20% of the profits for the industry. Whether that number is accurate or not can be debated. Apple does not report their financial results broken down by which products made which percentage of their profit. They also use a fiscal system, versus calendar year, which fucks up estimates due to fluctuations caused by seasonality.

I don’t care if Brian’s numbers are right, but I’m absolutely *ecstatic* that one financial analyst is not only looking at value share versus market share, but got the OK from his boss to publish his findings. Pretty soon another analyst will do this, and another, and another, and another, and maybe one day people will stop waving their dicks around about how many boxes they shipped and start looking at which companies are the best at printing money.

  • Doris

    Lose the foul language Stefan.

    • Chris P

      I hope thats a joke Doris, if so lol. If not.. you puritanical cunt;).

  • christexaport

    I think Apple is vulnerable with so much value coming from so few customers. A small shift would be catastrophic for them if they ever do start losing market share. Nokia is still well positioned, and they have room for growth in adding revenue per device. I don’t think Apple can maintain such figures for too long, and they’ll have to start growing faster customer wise, because if Nokia reawakens, I think Apple will be the biggest sufferer.

  • Matti

    Yes, lets kill one single data point, and then over glorify another.

    Intertubes for information.

  • Scott

    Stefan, do you have to try to be cool by cursing and talking about genitalia, or could you maybe act like a professional and report the news via concise language perhaps backed up by an astute observation of your own?

    Right, thought so. I’ll go read Engadget now.

  • value share != profit share

    What the dude from Deutsche Bank is measuring is profit share, NOT value share. Value share describes the total value you own from the market (hence the name). In case you want to calculate the value share, you should use the magic formula (amount of phones the company sold * company’s average device selling price) / (total market value) to get a crude number of each company’s value share.

    In case someone actually does this (and I do agree, it gives a much better view of what the situation is at the moment in mobile device market), Samsung will probably end up being very close to Nokia.

  • Petr Fiala

    Dear Sir / Madame,

    I have found on your website statistics about the market share for the past years. I would like to ask you for the following.

    I believe that for these complete statistics you have the data for the each country/manufacturer/ particular cell phone type on the monthly bases, don’t you?

    ( e.g. Sony- Erisson market share for February 2010 in Czech republic was 30,11% / most favorite cell phone in Czech republic was Samsung GT S5230 Star with the market share of 10,03%)
    Is it possible to get such a data?

    Sincerely

    Petr Fiala

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