Unit sales is meaningless when ASP grows faster

Article: Tukwila Update
By: someone (someone.delete@this.somewhere.com), February 7, 2009 9:38 am
Room: Moderated Discussions
Dean Kent (dkent@realworldtech.com) on 2/6/09 wrote:
>Devon Welles (no@thanks.com) on 2/6/09 wrote:
>>Do you even know what "revenue" is? Seriously, it's becoming more of a mystery why you even bother to post here.
>Revenue is an interesting metric. If, for example, revenue increases 10% per year
>- does that mean 'increased market', or 'increased profit' or just 'increased revenue'
>with no context whatsoever, and therefore pretty meaningless. Did the cost go
>up, and therefore the price (so no additional profit)? Or did just the price go
>up, with no change in cost? Or were more units sold at the same price per unit?
>Or did the price per unit decrease, and there were a lot more units sold? And,
>what happened in the entire market - did revenue increase or decrease, and why (fewer
>units, reduced costs, difference in exchange rates)?
>Meaningless without context, really. People presume that price stays static, and
>therefore increased revenue means increased unit sales - but that isn't necessarily the case.
>If companies and people would discuss 'units', that might eliminate some of the
>arguing, because at least then everyone is (hopefully) talking about the same thing.

Using units is even worse because it presumes not
only static prices but also prices are flat across units.

In the case of servers, unit prices vary over nearly four
orders of magnitude. Specific platforms have narrow
price ranges in practice - very few x86 servers sell for
over $5k, very few IBM mainframes sell for under $1m.
Is it meaningful in any sense to say x86 servers out
ship mainframes by say 5000 to 1? Maybe it depends
on whether you work for Microsoft or IBM. :-P

Itanium servers cover about three orders of magnitude
in pricing so it useless to talk about it primarily in terms
of units. If HP sold nothing but 1000 BL860c in Q1 and
nothing but 1000 Superdome in Q2 simply stating sales
were flat sequentially is hardly an accurate description
of business trends. This scenario is silly of course but
IDC numbers show the ASP of IPF servers has steadily
increased steadily from about $25k in 2003 to nearly
$100k last year.

That is why Itanium revenue increased over those five
years far more quickly (~11x) than unit sales (~2.9x).
Remarkably ASP grew faster than unit sales!
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                                    sufficiently intimate with the OSMichael S2009/02/26 06:29 AM
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  Tukwila Update - article onlineVincent Diepeveen2009/02/05 09:11 AM
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