Market size for the computer hardware businesses in the UK

Market sizing
New answer on Nov 15, 2019
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Anonymous A asked on Nov 12, 2019

Is this approach good?

To calculate revenue generated from computer hardware business in the UK last year, I would split into personal and business.

Personal:

  1. Split population into age groups
  2. Find proportion of that age group that would own computer hardware
  3. Use replacement rate to find computer hardware that year
  4. Times by average price of laptop?

I'm not sure how to calculate business. My guess is that I would need to take into account peripherals and services but how would one start this?

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Antonello
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replied on Nov 12, 2019
McKinsey | MBA professor for consulting interviews

Hi,
it is a good approach. I would also add the difference between laptop and desktop: while for laptops you can perform your arguments, for desktop I would treat it as a household problem.

For business PCs, you can make a strong assumption - if interviewer agree - like: I would consider as many PC for business (school, hospitals, professionals, companies, etc.) as for personal use. Otherwise, try to make assumptions about the percentages of people working in service sectors (and that need business PC).

You can then add a percentage for accessories and other service correlated to HW (e.g., insurance, assistance)

Best,
Anto

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Udayan
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updated an answer on Nov 15, 2019
Top rated MBB coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases

Hi,

An alternative approach to this is to split the population into households vs age groups.

- So assuming population of 60M, and a HH size of 3 let's say 20M HH in the UK

- Then make assumptions around computer hardware here - assuming it is desktops and laptops for now you can go with 4 or more per HH (most numbers work with some kind of justification)

- Once you arrive at the market value using replacement rate and average price of hardware you have the personal market (B2C) size for computer hardware in the UK

- For the B2B market, an alternate methodology is to assume that the total market size is xx% personal and yy% B2B. If we play with some assumptions for a bit, you can see that businesses will have higher replacement needs and higher prices as they can afford to pay more. However it is likely that there are fewer Business laptops than personal ones (as many people dont work and go to school etc.). It is reasonable to assume in my opinion that 50% of the market is B2B and 50% B2C - so if you double your estimate for personal you will be able to get total computer hardware market size for the UK

Hope this helps,

Udayan

(edited)

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Antonello

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