I had mentioned about MacBooks and Starbucks in a one-liner here. How this came about was my tendency to count the number of Apple MacBook users whenever I visited a Starbucks store. Out of 10 visits, on seven occasions I would see that MacBook users form the majority (>50%) of all laptops.
I posed this phenomenon to a few of my friends and colleagues, and one of them gave me a very interesting answer; MacBook users tend to be young adults, and Starbucks is considered a hipster joint, so these two things compliment each other. Short of carrying out a nationwide (or global wide) survey and research, from a presumptive point of view, it kind of makes sense.
So is there a positive correlation between MacBooks and Starbucks?
Good thing that the two companies, Apple and Starbucks, are publicly listed, so I can find out their market correlation using the Portfolio Visualizer (www.portfoliovisualizer.com). I will take the period of January 1993 to December 2018 for calculating the correlation, since Starbucks was listed somewhere in 1992, and the first MacBook (called the PowerBook) was released in 1991, to give a fair comparison.
Based on annual returns, the correlation is 0.161. While this number is positive, it is positive on the low end, and usually we see this correlation score between distinct asset classes.
So, does this mean my observations are wrong?
Short answer is, it depends.
It Depends #1
Both companies are in different businesses. Apple is in technology while Starbucks is in food and beverage. Also, in 2018 Mac computers (comprising of Mac desktops and MacBooks) formed only 8.9% of Apple’s total revenue2, as compared to Starbucks whose primary product is coffee. These reasons could explain why the correlation is low between them.
It Depends #2
On another note, my observation settings may be skewed. It is not wrong to look purely at MacBooks in Starbucks, since I am comparing these two variables. To make it more complete, we could see if MacBook users form the majority in other cafes or outlets that serve local coffee, or we could find out if MacBook users are at other non-café places such as fast food restaurants or the library.
It Depends #3
Back to the numbers game, we go by the law of averages and assumptions, and find out some interesting statistics. Assuming:
- Average Lifespan of An Apple Device: 4 years3
- Number of Macs sold between 2015 and 2018 (to fulfill the above 4 years): 76.53 million4
- Assumed number of Macs sold that are MacBooks: 76.53 x 49.11%5 = 37.58 million
- Total number of Starbucks outlets: 29,3246
If all MacBook users gather at Starbucks at the same time, there would be 37.58 million / 29,324 = approximately 1,281 per outlet!
Thus to form a majority, you would need 1,280 people or less using non-Mac laptops within each Starbucks. This is just “wow”. Of course, the last answer was given in a hypothetical situation which, in all probability, near to impossible to realize.
What I had gone through above is a very simple exercise in fact finding based on figures and observations, which I could classify them as quantitative and qualitative data, respectively.
So why am I mentioning this?
Simple. It is a way of doing fundamental analysis (FA).
You will encounter these two types of data when you conduct your FA; facts and opinions in the news, financial statements and management messages in annual reports, etc. Quantitative data is difficult to refute (aside from “figures fudging”) as they are past or “as at” data. Qualitative data is a bit on blurred grounds because it is obtained by non-quantified methods, such as observations, trend spotting and opinions. Biases from different individuals’ personalities and experiences could also play a part in qualitative analysis.
Contradicting as it may sound, we need both quantitative and qualitative data and information in order to give a more rounded picture in FA. I have always said that guesstimates (or calculated guesses) are better than pure wild-stab-in-the-dark guesswork, and these can be used for further analysis.
Sounds like hard work? Maybe for the first few times, but once you get the hang of it, it is easier. While you are at it, go grab a cup of coffee and enjoy it at the same time.
1 – Portfolio Visualizer. Asset Correlations. AAPL, SBUX. https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=AAPL%2C+SBUX&endDate=12%2F31%2F2018&timePeriod=4&numTradingDays=60 (accessed 21 Feb 2019)
2 – Statista. The Mac’s Waning Relevance to Apple. https://www.statista.com/chart/8817/mac-sales-as-a-percentage-of-apples-revenue/ (accessed 23 Feb 2019)
3 – MacRumors. Average Apple Device Lifespan Estimated at Just Over Four Years by Analyst. https://www.macrumors.com/2018/03/02/average-apple-device-lifespan/ (accessed 24 Feb 2019)
4 – Statista. Global Apple Mac sales in the fiscal years from 2002 to 2018 (in million units). https://www.statista.com/statistics/276308/global-apple-mac-sales-since-fiscal-year-2002/(accessed 23 Feb 2019)
5 – GlobalStat StatCounter. Desktop vs Mobile vs Tablet Market Share Worldwide. Jan 2018 – Jan 2019. http://gs.statcounter.com/platform-market-share/desktop-mobile-tablet(accessed 24 Feb 2019)
6 – Statista. Number of Starbucks locations worldwide 2003-2018. https://www.statista.com/statistics/266465/number-of-starbucks-stores-worldwide/ (accessed 23 Feb 2019)