Technology – Consumer

Youthful But Maturing Brands Compete to Innovate and Grow

Chinese technology leaders head West

With a 40 percent increase in brand value, technology giant Google claimed the title world’s most valuable global brand, ranking number one in the BrandZ™ Top 100 Most Valuable Global Brands 2014.

Google’s rise symbolizes the strength of the technology category that by itself totals $827 billion, almost 30 percent of the value of the BrandZ™ Global Top 100. The technology category rose 16 percent overall in brand value.

The dominance of technology in the BrandZ™ Top 100 Most Valuable Global Brands reflects the ubiquity of technology in people’s lives and the strength and global nature of the category brand leaders, including:

  • BrandZ™ leaders
    Four of the top five BrandZ™ most valuable global leaders are technology brands. Apple, IBM and Microsoft follow Google. Microsoft claimed the spot in 2006. Google ranked number one from 2007 to 2010. Apple was number one from 2011 to 2013.
  • Fastest risers
    The fastest rising brands across all categories include: China’s Internet portal Tencent, up 97 percent, Facebook, (68 percent), Baidu, the Chinese search engine (46 percent), and Yahoo!, which owns a stake in Alibaba, the Chinese ecommerce site (44 percent).
  • Newcomers
    Two technology brands entered the BrandZ™ Top 100 Most Valuable Global Brands for the first time, Twitter, which launched a successful IPO in 2013, and LinkedIn, publicly traded since 2011.

The rapid rises in brand value – and the fluctuations, with Apple declining and Microsoft rebounding – point to the extraordinary rate of industry maturation and innovation happening simultaneously.

Some of the brands assert a higher purpose summarized as “Smarter Planet” (IBM) or “Do no evil” (Google), which advances the interests of humanity and improves life for individuals, while building loyalty and driving profit. The most successful technology brands are those that constantly push the brand life cycle curve to the right.

Searching for meaning

Both a brand and a verb that means “to search,” Google has become part of people’s lexicon and lives. Google launched Gmail 10 years ago. Today, over 425 million personal signatures end with @gmail.com. The brand has successfully monetized this stature with a value exchange that converts aggregated personal data into information that potentially helps marketers and consumers connect in more relevant ways.

Alongside its core business, Google has built a culture of innovation. Some initiatives are market driven and have immediate impact. Google Glass places Google at the vanguard of technology and wearable devices. Google created an Android Wear Operating System for use with watches and other wearables.

Other more long-term initiatives include research into artificial intelligence, slowing aging, improving car safety and redesigning cities with driverless cars. Projects like these elevate the brand, so that it’s viewed as both a commercial and scientific enterprise, practical in its need to generate profit but also generous. And what Google doesn’t innovate, it acquires, such as its purchase of Nest, a home automation company.

Refreshing and building a young brand

Facebook, which didn’t enter the BrandZ™ Global Top 100 until 2011, now ranks 21. The company’s $19 billion acquisition of WhatsApp illustrates both the financial power of Facebook and the need to refresh a brand only 10 years after its establishment in 2004, at Harvard. Facebook claims about 1.2 billion members. As they age, the WhatsApp messaging service reaches a younger audience.

Not all Facebook’s initiatives were about coping with maturation. Within a week after purchasing WhatsApp, Facebook staked its claim to the future of virtual technology with the acquisition of Oculus, a producer of virtual reality goggles.

Facebook also announced that it was experimenting with the drones, satellites and other technology to connect even the most remote parts of the earth. The rise in brand value reflects investor confidence in this vision and a rebound from weak share movement immediately after the 2012 IPO.

Having anticipated the future, Apple tries to catch it

The decline in Apple’s brand value reflects softening of the share price because of investor concern about the future of the company after founder Steve Jobs, and the recent lack of breakthrough products that differentiate Apple.

That said, Apple’s share price performance over time suggests that confidence remains strong in a technology brand that makes products, retails them around the world, provides content and is renowned for combining technology prowess, design and service. In BrandZ™ research, consumers rate the Apple brand extremely high on being different, innovative and meaningful. This may be the year that Apple introduces another major innovation – iPhone 6 or Apple TV. The company entered talks with Comcast, the largest cable company in the US.

To drive volume, Apple introduced a new line of more popularly priced phones and it signed an agreement with China Mobile, the world’s largest telecom provider with over 750 million customers. Like a luxury brand, Apple faces the dilemma of balancing exclusivity to protect the brand and command a price premium, while expanding to mass to gain volume at the risk of brand dilution.

Samsung challenged Apple with its Galaxy smartphones. Operating on the Android platform, the phones have a larger screen than the iPhone and other features that Samsung successfully promotes. The company preempted Apple with the launch of wearable technology, the Samsung Galaxy Gear smartwatch that coordinates with Samsung phones and tablets.

Chinese brand leaders

Along with Google, Facebook and Apple, Amazon also created an ecosystem of products and services that have become fundamental to how people live their lives. (Please see Amazon in the retail category on page 72). And at the same time these Western brands developed, a separate group of brands served the enormous Chinese market of 1.3 billion people.

Some of the market dynamics mirrored those in the West as various Chinese brands initially occupied particular market niches: Baidu in search, similar to Google; and Tencent in social media like Facebook. As in the West, those initially discrete designations converged. Driven by consumer interaction and determination to secure a competitive edge, the brands developed ecosystems of products and services.

Baidu strengthened its mobile presence through acquisitions and other activities, including expanding in China’s rapid growth gaming business. It purchased 91 Wireless, a mobile app store and it acquired Nuomi, a location-based group buying service. Baidu’s revenue increased 43 percent in 2013.

Tencent, with just over 800 million monthly active users (MAUs) on its social network at the end of 2013, is somewhat smaller as a social network than Facebook, which reported 1.2 billion MAUs. With its messaging app, WeChat, included in the member count, Tencent had been larger overall until Facebook acquired WhatsApp.

Like Facebook, Tencent is adding members and looking ahead for the next opportunity. Tencent purchased a stake in JD.com, China’s second largest ecommerce mall, which positions it to compete with Alibaba, the ecommerce giant. Its strategic partnership with the search engine Sogou puts Tencent head-to-head with Baidu.

Tencent strengthened its mobile payment ability and developed online gaming, with its popular mobile messaging app, WeChat, which has about 355 active monthly users. Facebook’s WhatsApp claims about 450 million users. Both Tencent and Alibaba introduced mobile payment and financial services options that compete with traditional banks.

Twitter, LinkedIn and global competition

The Western and Chinese technology brands, which have for the most part developed separately, are about to face each other competitively. This development is best symbolized by the pending IPO of Alibaba, which is 24 percent owned by Yahoo!. In addition, LinkedIn, the professional social networking site, introduced a Chinese language version of its website.

LinkedIn currently has four million members in China. The Chinese language site is part of the brand’s stated strategic mission to become a global network creating economic opportunity for a worldwide workforce of three billion people. The integration with leading Chinese portals, including Tencent and Sina, into its Chinese language platform enables users to access their contacts.

LinkedIn intends to map all workers, companies and available jobs and also establish a digital presence for the institutions that offer the education and skills necessary for career success. LinkedIn currently has almost 280 million members, about two-thirds located outside of the US.

Founded in 2006, Twitter launched a successful IPO in late 2013. The funds are intended to accelerate the growth of the site, which describes itself as the only online platform that’s both public and real time, democratizing content creation and distribution.

It regularly receives attention as the venue for global conversations that take place around political events in text bursts of 140 characters. The brand is working to improve the organization of the conversations, making Twitter more useful by organizing conversations topically and not simply chronologically.

Action Points

Be flexible.

Change happens quickly in technology. The most elegantly designed boardroom strategy will not work unless it allows the company to be nimble and make decisions quickly.

Exhibit thought leadership.

With transformation happening in many industries, it’s important to demonstrate knowledge and to provide the technological solutions your clients need to navigate though disruption.

Nurture innovation.

Technology companies are distinguished by their people. Build a culture of innovation. Throughout the organization incentivize people to seek out new ideas and take risks.

Celebrate success and move on.

Success should signal urgency to change. You can’t stop, especially in technology. Success requires conviction, being all in. Make the business obsolete before the competition does.

Technology Up 16%


Definition
The technology category includes business-to-consumer and business-to-business providers of hardware, software, portals, consultation and social media platforms. The diversity of the technology category reflects the convergence occurring as brands develop integrated systems of products and services.


BrandZ Top 100 2014

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic


Methodology and valuation by Kantar Millward Brown


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