Sizing Markets Underlying New Technology

New technologies help make the world a better place. Indeed, a great number of web applications make people’s lives more enjoyable, more productive and more connected. The icing on the cake is that they also make business experts’ lives easier by offering more data than other industry when it comes to market sizing.

Broad market sizing

The first and perhaps the most obvious way to define the market is to look at the one thing that all web application users necessarily have in common: they’re connected to the web. Whether they use a desktop, laptop, tablet or smartphone, they can technically be identified and counted as fixed or mobile broadband subscribers. Luckily, statistics on broadband users are precise, available and free. One good source is the International Telecommunications Union’s website (ITU), where one would simply need to click on the “statistics” tab, and then on one of the links in the “Free statistics” section. For example, their page entitled “Key 2005-2011 ICT data, by geographic regions and by level of development” indicates that there are 591 million fixed broadband subscriptions in the world in 2011, and another 1.186 billion active mobile broadband subscriptions. One detail to watch out for is the fact that a fixed broadband subscription is often shared among several members of a household, who are in fact several individual webware users. Another issue to keep in mind is whether or not to take the statistics for all Internet connections rather than only broadband, considering that in many countries people do still use dial-up! The answer would depend on the specific type of webware in question, and the connection speeds that are targeted.

Targeted market sizing

Other more targeted methods of market sizing involve specific platforms or user characteristics.

On one hand, if the technology relates to a specific distribution platform, then the total potential market would be equal to the related installed base. This information is available on Wikipedia for free under the heading “List of digital distribution platforms for mobile devices”. For example, the Wikipedia page shows that the Android Market had an installed base of 130 million in July 2011, the App Store had 250 million in Oct 2011, and the Nokia store 825 million in June 2011. In addition, the same page shows the number of apps available on each platform, the download count and the developers’ cut per sale, which could also be useful valuation inputs.

On the other hand, if the technology specifically targets a given demographic or behavioral profile, some of the main online advertising platforms can be excellent sources of free data. For example, Google’s AdSense program has a useful keyword rating tool that can quantify the expected response for various keywords in different languages or countries. Another example is Facebook’s advertising program, which shows the estimated reach for a given set of criteria. For instance, at the time this article is being written, there are 3.297 million Facebook users who live in Australia and are between the ages of 15 and 18 inclusive. Of course, in both cases, the information obtained would have to be extrapolated to the general target market and used as an approximation, since neither Google nor Facebook account for all Internet users.

To be even more specific, one could commission a special mobile survey to try and determine particular attitudes and behaviors related to a given time and location. For example, “On Device Research” has access to an international panel of users who are willing to respond to surveys on their mobile phones. The service provides automatic device, mobile operator and country identification, and can help determine which markets are more relevant to a specific product. By combining this information with the various market sizing methods discussed above, an even more precise and relevant market size can be estimated.

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