How many laptops are sold in US every year? Any thoughts?
How many laptops are sold in US every year?
Using the replacement-framework:
Goal: #laptops sold / year
- #laptops = (laptop/person) * (total amount of people)
- = 0.5 laptops per person (tables and desktop are solid substitutes) * 300M people
- = 150M laptops in total
- Life-span of laptops are approximately 3 years
- #laptops / lifespan
- = 150M/3y = 50M/y
- This could be the answer or if you want to integrate a trend, do the following:
- negative trend because of more substitutes (tables, mobile phones, etc.)
- Approximately 5% per year, so 5% of the total amount will not be replaced
- = 150M*5% = 7.5M
- Answer of 50M - 7.5M = 42.5M
- The answer would be: In average 42.5M laptops will be sold per year in the US.
I highly recommend the book "Case in Point" by Marc P. Cosentino for this type of question:
- Make assumptions and break the population down by generation.
- Determine the number of cell phones in each generation.
- Calculate the number or percentage of laptops out of each generation's number of laptops.
- You may want to draw a chart to show how well organized you are and how logically you think. It also makes it easier for the interviewer to follow your thought process.
Assumptions: 320M Americans, life expectancy of 80 yrs, even distribution among the ages. I'm going to divide it into generations 0-20, 20-40, 40-60, 60-80. That means 80M people per generation." [read more on p. 17/18]
Kids 0-16 or 64M American children don't own computers. Out of the remaining 4M kids I'll assume that 3M have a laptop...
Reason through your numbers for each generation and fill in the chart as you go along.
I would come up with a 150M laptops in the US. However, the question called for the number of laptops sold each year. The average laptop lasts for 3 yrs (assumption). I'll assume that 80 percent will upgrade to a newer model. That means 50M x 0.8 = 40M. Thus 40M laptops where sold last year...
There are quite a few ways to crack the problem. However, my favorite approach is by segmenting the population.
So you start with total population in the US (i.e. 320 million) and the life expectancy (i.e. 80 years).
Then categorized population into segments (e.g. children, college student, working level, retirement). You can simply the maths by assume that population is uniformly distributed then assign the age range to each segment,and you will be able to calculate how many people are there in each segment.
Next is to assign percentage of those who own laptop in each segment.
Now here is the important part. You will have to estimate the life time of laptop, for example 5 years. This will mean that laptop will have to be replaced every 5 years.
So you cannot just assume that number of laptop sold will be equal to number of laptop owned. It need to be divided by years of replacement to get to final answer.
Hope it help!
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