Question
I am dealing with controlling air conditioner through the internet (app).
I have data how many airco's are being sold every year.
I have data what's the penetration of smartphones in the countries i target.
I have data how many households have WiFi (it's mandatory for my device).
How do I get the number how many potential customers (airco, smartphone and WiFi) do i have?
Answer
You can derive a loose TAM (Total Addressable Market) based on this data using the following formula:
Total Number of Aircos Sold x Smartphone Penetration Rate x Wifi Penetration Rate = TAM
In order to determine WiFi penetration, you'll simply divide (Number of Households with WiFi) / (Total Households)
I would suggest doing this per geography if you have the data that way.
An example: (100,000 aircos sold in Denmark) x (.75 (75%) Smart Phone Penetration In Denmark) x (.80 (80% WiFi Penetration in Denmark) = (56,250 Total Addressable Market in Denmark)
This will only paint a rough picture, because we cannot derive distribution within these statistics - like knowing a higher percentage of households with smartphones have wifi - which would increase your calculated TAM. For example, if we knew that everyone with a smartphone had wifi, even though individually smartphones and WiFi are still at 75% penetration - our calculated example above would be 75,000 not 56,250.
Hope this helps!
Ryan
