Consumer | More scale, more sales, more scrutiny
Suddenly, size mattered.
Brands once loved almost unconditionally as prodigy start-ups, faced the consumer scrutiny reserved for large institutions and corporations.
While they enjoyed their smart cars, smart appliances and smart phones, consumers worried that technology brands might be getting too smart and too big. Consumer concerns about intrusiveness and privacy conflicted with their desire for more connectivity, mobility and speed.
The death of visionary Apple founder Steve Jobs coincided with questions about the brand’s long-term growth and the labor standards along its supply chain. Grumbling over the cost of Facebook advertising and the company’s privacy practices preceded its IPO, scheduled for early in 2012.
As the world’s second most valuable retail brand, Amazon received the same complaints about size and dominance often aimed at Walmart, retail’s brand value leader. And while consumers may have agreed with the Google motto, “don’t be evil,” they questioned how the company would use all the personal information it amasses.
Within this challenging context, and while struggling with regulatory issues, brands continued to innovate. They shifted much of their attention to cloud computing and to developing intuitive and voice interfaces. And they competed with each other as ecosystems attempting to offer the best devices, content and connectivity (Please see the Telecoms story on page 93). The brands mostly generated strong financial results.
Apple sales reached the clouds
With a 66 percent increase in net sales to $108.2 billion during its 2011 fiscal year, Apple continued to innovate and upgrade, introducing iPad 2 in March and iPhone 4S with Siri voice activation in October, when it also launched iCloud. Apple also added an eighth generation Mac operating system called Lion. The company reached $500 billion in market value and remained Number 1 in the 2012 BrandZ™ Top 100 Most Valuable Global Brands, with a brand value of $183 billion.
Distribution of the iPhone expanded in the US when Verizon became a carrier in February 2011, ending at &t’s exclusivity. With 172 million iPads, iPhones and iPods sold during 2011, Apple continued to lead in what it calls post-PC devices. The company offered over 585,000 apps in its App Store. And it operated around 360 physical stores worldwide.
Google revenue increased 20 percent to $37.9 billion in 2011, primarily from advertising. Still primarily a search engine, the brand introduced Google+ in June, an attempt to compete with social networks like Facebook by organizing participants into groups with shared interests. Almost 90 million people joined by year’s end. The brand closed Google Buzz, however, its attempt to compete with Twitter.
With Google’s acquisition of Motorola Mobility, the phone maker is expected to develop mobile devices operating on the Android open platform that Google developed. The combination of device and platform potentially makes Google a rival ecosystem to Apple and other technology leaders. Although Android enjoyed greater global market share than Apple last year, according to Kantar Worldpanel, Apple share was expanding faster, driven by iPhone popularity, particularly in the US.
Facebook prepared fro IPO
Microsoft ended 2011 with sales of almost $70 billion, a record for the company and a 12 percent year-on-year increase. While the company continued to benefit from its legacy PC-focused products, Windows and Office, it was poorly positioned for the consumer shift away from PCs to mobile devices. Windows 8, scheduled for release in 2012, is designed to sustain Microsoft’s PC dominance while better accommodating mobile devices with a more cloud-based approach.
Microsoft’s Xbox 360 was the best-selling home video game console in the US last year. In a joint venture with Nokia the company developed devices to run on the Windows platform. Microsoft acquired Skype in October.
Founded in 2004, Facebook had 845 million users at the end of 2011. Its revenue for the year was up 33 percent to $3.7 billion, predominately gained from advertising. With a brand value appreciation of 74 percent to $33 billion, Facebook was the fastest riser in the 2012 BrandZ™ Most Valuable Global Brands. Facebook prepared for an IPO that was expected to drive its market valuation close to $100 billion, some speculated. The company, which essentially is about sharing personal information, faced rising concerns about privacy.
Global economy challenged brands
Samsung, the enormous Korean conglomerate, increased sales 7 percent, although net income declined 15 percent, in part because of intense competition and global economic factors. The company’s broad range of products—including TVs, mobile devices, cameras, computers and printers and home appliances— positioned Samsung as a potential leader in smart house connectivity. The success of its Galaxy series handset drove a 40 percent year-on-year revenue increase in Samsung’s telecommunications division.
Sony was impacted by the flooding and nuclear crisis in Japan and by the flooding in Thailand, as well as by global economic and competitive issues. Following a series of problems, including poor consumer reception for its PlayBook tablet, and a serious system failure in October, profits for BlackBerry maker RIM plummeted to $1.16 billion from $3.4 billion a year earlier and the company planned to reorganize.
In China, an important market for global technology brands, local brands also thrived. Tencent, China’s largest Internet portal, continued its rapid rise, claiming more than 700 million users for its popular instant messaging service called QQ. Using variations of the QQ brand name, the company also offered news and entertainment, search, gaming and ecommerce.
China’s largest search engine, Baidu, prepared to venture beyond China and set up an office in Brazil. The company has a small presence in Japan. Google’s exit from China, in 2010, benefited Baidu, and the company’s shares appreciated by about 50 percent last year. Chinese consumers appreciated Baidu’s familiarity with the subtleties of Chinese language and culture. In the 2012 BrandZ™ ranking, Baidu received one of the highest scores for Brand Contribution, a measurement of brand strength exclusive of financials or any other factors.