Imagine you created a new type of product that would replace the mobile phone. How would you determine how many units to manufacture?

Answer 1

When you say replace the smart phone are you saying it will replace the smart phone platform and user will need to reinstall all his installed apps etc?

Is it going to be as cheap or expensive as the typical android phone - yes.

Will there be multiple pricepoints for this new device - yes

It won't be globally available, you'll start with developed countries/large smart phone markets - you'll ensure you get 50% coverage 

I'm assuming there will be developer support from major companies so that won't be a problem for someone buying this new phone

For context smart phones have been around for close to a decade, currently rougly half the population of the world has smart phones.

So your market is going to consist of a portion of existing users porting + some new users coming onboard.

Existing users that are going to port 

Peope upgrade there phones every 2-3 years so assuming 2.5 years, so rougly 1.4 billion people will buy the phone this year, 50% of which is 700 Million. 

The rate of adoption will vary from cohort to cohort, I'm assuming cohorts are as following

5% innovators - 20% adoption - 7 Million

15% early adopters - 10% adoption - 10.5 Million

50% early + late majority - 5% adoption + 17.5 Million

30% laggard - negligible adoptions 

 

Off the people yet to come online assume 10% come online every year ( current rate of growth)

350 Million, These will be extremely cautious users and extremely unlikley to consider a new platform , assuming 5% adoption, 50% reach, it'll 8.5 Million

 

43.5 Million for year 1 , assumes 10% YoY growth if the phone does well for first year 

Comments

Hi, trying to follow your answer.

1) What does the 1.4 billion refer to?

2) How do you break down the cohorts and decide the number of customers? For example 5-20% are early adopters which add up to 7 million. Could you clarify how you got to that answer?

Thanks!

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Thanks for pointing out - I gobbled up an entire line while typing out , assuming 50% peneration of smart phones world wide if you take an upgrade cycle of 2.5 years on average then about 1.4 billion people will upgrade a year 

2) How do you break down the cohorts and decide the number of customers? For example 5-20% are early adopters which add up to 7 million. Could you clarify how you got to that answer? - these are standard trends for new tech adoption , it's a bell curve so your assumption could vary slightly 

Answer 2

clarification;

1. new device type? do we already know what that device model looks like?

2. replace what mobile phone? smart vs non smart? android vs iphone?

3. in which market? country US or global?

4. to which customers?

5. any price strategy? cheap, expensive, multiple?

 

Then calculation