Calculating TAM SAM SOM with Fermi estimation

[ishanijerin1]

This time, we will introduce an example of calculating "Target Market: SAM" using Fermi estimation.

Now, let me give you two concrete examples of calculations.

Calculation example 1: Smartphone sales service
TAM is estimated to be the total information terminal market of 79 trillion yen and the smartphone market of 73 trillion yen.

This time, to find the size of the Japanes e smartphone market, we calculated it by multiplying the smartphone ownership rate, the number of smartphones uses of twitter owned per person, and the unit price, and then dividing the result by the replacement frequency.
First, we assumed that the smartphone ownership rate is 70% of the population, with each person owning an average of 1.2 smartphones. We then set the unit price of a smartphone at 50,000 yen, and the replacement frequency to two years, when the carrier contract period ends. We calculated the annual market size of Japan's smartphones by multiplying each of the numbers we set and dividing the result by the replacement frequency.

Population 130 million x ownership rate 70% x average ownership rate 1.2 units x unit price 50,000 yen x replacement frequency every 2 years = market size 2.7 trillion yen

The market size of smartphones in Japan (target market for this product: SAM) was calculated to be 2.7 trillion yen per year.
Smartphones account for most of the information terminal market, and even if we focus on Japan, the market size is still huge at 2.7 trillion yen. By 2030, the global market for smartphones alone is expected to reach 110 trillion yen, and favorable growth is predicted, but the fact that the market is large also means that it is a highly competitive red ocean market, so in order to beat the competition, we would like to make better use of TAM, SAM, and SOM and refine Fermi estimation.

Calculation example 2: Rental service with physical stores in Tokyo
First, the market data tells us:

Real estate industry: 44 trillion yen
Owner-occupied vs. rented: 6:4
Tokyo's rental ratio: 51%

Based on this premise, we will use Fermi estimation to estimate the size of the Tokyo rental market with the target market being SAM.
First, we will estimate the annual rental sales based on the ratio of owner-occupied homes to rentals for real estate sales of 44 trillion yen.