Learn something new every day More Info... by email
The installed base for a particular product or service refers to the number of people or households within a market that own or are actively using it. This term is used quite frequently for video games and computer platforms to relay data regarding the number of customers who own a particular console or platform. While many companies use market share to indicate success, since this shows profits made by that company based on units sold, the installed base for a game console or computer system is often more important in those industries as it dictates the likelihood that future hardware and software are going to succeed.
Not all industries can utilize installed base data, since many products rely only on an initial sale for profits to the manufacturer. While many businesses strive to retain customer loyalty and build brand recognition based on customers, video game consoles and computer platforms often require much more loyalty to succeed. Since a game console is only a system on which games can be played, though other features have been introduced on these systems, success for the developers of those games depends on the units of consoles sold. These sold units can fail or be disregarded, however, so the installed base for those units is often much more important.
A company that develops software for personal computers (PCs), for example, needs to know the installed base for PCs in a particular market. This allows the company to better understand the total number of potential customers interested in the software developed. A pen manufacturer does not need to know the installed base for any other product, since people often purchase pens regardless of other products. The makers of computer and game software that do rely on another product, such as a console or platform, often base development on the installed base of different systems.
This information is not always publicly released by game or computer companies, however, as this is very valuable to those businesses. A new game console may initially produce high sales numbers, which makes the system seem quite successful. When this is compared to the installed base of a system that has been out for one year, however, the success of that console may seem greatly reduced. On the other hand, after two consoles have been in release for several years, then comparisons of their respective installed bases can indicate which system is truly more successful. Developers of games are then more likely to make games for the console that is in more homes and can generate more sales for that developer.