Dumb forecasts for Smart Phones

I had just read Gartners 3 year forecast for the Smartphone market this morning (see above), and was marvelling at how they could even deign to forecast such a thing with one set of numbers, never mind assume that Android will continue to rise inexorably for the next 3 years just because it has for one year alraedy - haven't they heard of "S" curves?

I was going to write a suitably pedagogical post about the importance of standard deviations around numbers over time, about the inevitability of th eS curve, about the need for scenarios, dynamic models and other methods of dealing with uncertainty in this sort of work - but ZD Net has done a good debunking job already:

After looking more closely at and thinking further about the latest Gartner predictions that show Symbian falling 10% over the next four years, Android rising 12%, RIM falling 6%, iOS falling 0.5%, and Windows Phone falling 0.8% I have to say I think these type of forecast reports are interesting to talk about and discuss, but should not be taken too seriously. The smartphone market is not like the PC market. The smartphone market moves very fast and just because one platform is extremely popular at the moment and shows major growth does not mean it will continue for years.

They also do quite a good pen picture of the sort of narratives one might design into scenarios of market evolution, for example (I have edited it):

Symbian - I don’t think predictions of such a steady reduction in market share over the years is accurate. Symbian has no measurable impact in the US, but that could easily change with proper marketing and wireless carrier support as we saw with Android and the Motorola Droid on Verizon.

Android - It wasn’t until Motorola launched the Droid on Verizon that Android took off at breakneck speed to the level now where every carrier has decent Android devices with nothing looking to stop the momentum at this time. However, to rise another 12% in four years (going from 47.5 million to 260 million) in a crowded smartphone market will be quite a feat for Android with operating system fragmentation and an almost overwhelming number of choices for consumers.

RIM - has been able to count on the enterprise market for a fairly steady share of the market and the largest in the US, but the rather disappointing incremental upgrade seen in OS 6 doesn’t look to bring in too many new smartphone consumers.

Apple - iOS showed a meteoric rise when it went from a nonexistent entity to 15% in just three years. It has now flattened out and is primarily selling to previous iPhone buyers who upgrade and will most likely continue this way until they expand beyond AT&T in the US. Apple charges premium prices for their devices and is quite profitable with the iPhone business so that could sustain them and help them continue to gain market share. (To this I would add hat i you look at Apple over 30 years their strategy is always to enter early and to carve out the most profitable 15% of the market, leaving the rest to fight over commodities)

This is more like how we would predict the market - look at the numbers today, develop the above narratives into about 3 scenarios each, build a dynamic model - with standard deviations around the predicted means - that then plays with the scenarios and then look at the "what you have to believes" to understand where the SWOTS and leverage points are.

Bad news with our approach is it is harder to do than taking a spreadsheet and just projecting it out for X cells in time, but the good news is that it gives you a deeper understanding of the likely twists and turns in the game so you can see it coming. Sort of the difference between a fish and a rod.

An aside - we traditionally (for the last 10 years anyway) take forecasts like these from Planet Mobile analysts and halve them, turns out to remarkably accurate (in an 80/20 sense) for about 5 minutes work