Via John Gruber, Horace Dediu looks at how poorly analysts fared when it came to predicting the size of the market for the iPad. Apple sold just shy of fifteen million iPads in 2010. (starting in April, when it launched.) Every pundit with any kind of audience underestimated how successful it would be, usually by a long ways. Moreover, Philip Elmer-DeWitt notes that professional analysts (employed by investment firms and so on) did much worse than “unaffiliated” analysts with blogs, even when it came to just the previous quarter:
In our ranking of the best and worst Apple (AAPL) analysts for Q1 2011, which lists them based on how accurately they predicted seven key numbers—revenue, earnings, gross margins and unit sales—the unaffiliated analysts … took 9 out of the 10 top spots. The bottom 20 spots were all held by professionals working for the banks and brokerage houses. Taken as a whole, the numbers they sent their paying clients were off by a margin (9.04%) more than twice as big as those generated by the guys who do it for free (3.94%).
I have a limited amount of sympathy for the analysts. Predicting the future is rather harder than predicting the past. But it’s strictly limited, because even a cursory survey of the field shows that IT punditry is stuffed to the gills with people who don’t seem to know anything. Even so, the fact that everyone got it badly wrong is striking. After Steve Jobs demoed the iPad last year, I asked the undergraduates in my Organizations and Management class whether they planned to buy one, and whether they thought it would be a success. The students in this class are a broad cross-section of the Duke undergraduate population, with majors from a lot of different fields. Without exception, they thought Apple had laid an egg with the iPad and that it was impossible to see any use for the device that (a) wouldn’t be better satisfied by either a phone or a laptop and (b) would still be worth paying the asking price for. I’m teaching the same course this semester, so yesterday I asked the class how many of them owned an iPad. A small number did: a bit less than one in ten. (This in a population where, on the one hand, most could afford an iPad if they wanted one but, on the other, almost everyone already owns a laptop for schoolwork.) Then I asked how many of them knew someone outside the class who owned an iPad. Everyone put up their hand.