Incremental Change in Innovative Category

Brand values fluctuate

The brand value of the technology category remained flat, down 1 percent compared with a rise of 2 percent a year ago.

A period of product iteration rather than innovation failed to excite consumers or investors. The latest tablets sold well, but did not inspire like the inaugural iPad.

The fortunes of brands changed suddenly and unexpectedly. Skepticism about Apple depressed its share price. After Facebook's much anticipated IPO, its stock dropped dramatically. Meanwhile, Samsung enjoyed a 51 percent rise in brand value on the sales success of its mobile devices.

Social media's popularity drove the brand value of China's Tencent up 52 percent. Yahoo! joined the BrandZ™ Top 100 Most Valuable Global Brands after the appointment of a new CEO, from Google, lifted expectations. This development, along with Yahoo's investment in the Chinese e-commerce site Alibaba, helped drive the share price and the appreciation of brand value.

These developments happened in a complicated environment characterized by these trends:

Ubiquitous technology

The cloud, mobile and social media enabled people to seamlessly integrate their personal and business lives.

Iterative change

To beat competition to market, brands introduced products that were more iterative than innovative, but which offered features intended to entice consumers to trade up.

Consumer sophistication

New and shiny was not enough. More knowledgeable and discerning consumers, acting as if they headed personal IT departments, expected a reasonable return on their technology investments.

Toy or tool

Technology made life less compartmentalized and location irrelevant. People worked and conducted personal business interchangeably at their job, at home, at a coffee house, anywhere. This blending influenced the ongoing transformation of technology in the workplace.

Initially shaped by business use and the requirements of corporate IT departments, the technology category became increasingly "consumerized." People who enjoyed speed and simplicity in their use of technology at home expected no less at work. Their impatience with IT mystique led to a broader acceptance of BYOD, Bring Your Own Device.

Microsoft introduced Windows 8 to help consumers integrate their private and business lives. Some brands, like Dell, introduced convertible devices that worked as both laptop and tablet. A typical business traveler might work on a laptop, a tool, and then take an entertainment break to view a movie on a tablet, using it as a toy.

Apple remains number one

Based on underlying brand strength, Apple remained the most valuable technology brand, despite a steep drop in share price. The stock declined after Apple fumbled the introduction of iPhone 5. The replacement of Google Maps with a troubled Apple version ignited investor concern that the brand's capacity for creative design and smooth execution ended with the death of founder Steve Jobs.

Google benefited from that skepticism. As Apple stock fell, Google stock rose to record highs. The share price appreciated based on the performance of Google's multiple businesses including: ad revenue from online search, the market dominance of its Android operating system for mobile devices, and the ubiquity of Gmail.

The increase also reflected confidence in Google's potential to enter and quickly assume leadership in other technology businesses. With a 5 percent hike in brand value, Google became the second most valuable global brand across all categories, after Apple and just above IBM.

Apple's weakness also helped Samsung, although Samsung also helped itself. Samsung's brand value rose sharply primarily because of its Galaxy smartphone. Consumers responded well to the product experience and also to commercials that positioned the device as the choice of the young and hip, while poking fun at Apple iPhone as the brand choice of the parents.

Competing ecosystems

Apple's future depends on more than who makes the best devices, however. The consumer brand universe is divided into two groups: those that produce products and services; and those whose products and services exist as part of the brand's platform or ecosystem.

This second group of brands includes Apple and Google along with Amazon, Facebook and Microsoft. Each brand represents an ecosystem of branded devices, an operating system, and content.

Amazon, for example, sells the Kindle, but the device is part of the larger ecosystem that includes content in the form of e-books, music, movies, and a repository of product information and customer opinions stored in the Amazon Cloud. (Because Amazon derives most of its revenue from e-commerce, the brand is listed in the retail category ranking.)

Facebook Home, introduced in March 2013, is actually software that fits over an Android platform, preempting other apps. Phones loaded with the software open to the Facebook newsfeed. Although Facebook Home isn't a device, it acts like one, making all of Facebook's content instantly mobile, not even a click away.

A fundamental distinction regarding ecosystems is whether a system is open— generally accepting of applications from other brands—or closed. Part of the skepticism surrounding Apple was the notion that its closed system advantage—quality control and consistent performance— erodes as devices reach rough parity in quality and reliability. That formulation, however, discounts the intangible hold that Apple may have on adherents drawn to its combination of product innovation, design leadership and retail presence—to the overall Apple brand experience.

Chinese brands shift, too

The value of technology brands fluctuated in China as well. In contrast to the decline of Facebook's brand value, the band value of its Chinese equivalent, Tencent rose 52 percent, making it one of the Top 10 Risers in the BrandZ Top 100 Most Valuable Global Brands.

Tencent reports almost 800 million active users of its QQ instant messaging service in China. But the brand value increase was in part driven by excitement around WeChat, which enables users to send both voice and text messages from the mobile devices over the Internet, avoiding SMS charges, similar to WhatsApp.

In contrast to Tencent's brand value appreciation, Baidu declined in value 16 percent. China's dominant search engine, with an estimated 75 percent market share, invested to position the brand for the transition from PC to mobile. The investment lowered earnings and impacted the share price.

Insights BrandZ BigData™

BrandZ™ Top 10 brands attract growing interest

The last five years have seen growing reliance on technology and its integration across all sectors. BrandZ™ data show that consumer interest in the Top 10 technology brands has rocketed during that period.

The number of people reporting that they sought information about one of the BrandZ Top 10 technology brands rose 49 percent over the past five years, compared with a 26 percent rise for the Top 100 brands across all categories.

At the same time, the average media awareness of the BrandZ Top 10 technology brands increased 23 percent, while slipping 3 percent for the Top 100 brands. Budget shifts and greater media efficiency have benefited technology brands.

Action Points

1. Deliver utility

Provide products and services that people actually need and can depend on for their efficacy.

2. Protect trust

In a socially connected world, brand viability depends the implicit contract with customers who supply personal information in exchange for a product or service of roughly comparable value. The contract is both vital and fragile. When violated, it's hard to restore.

3. Make more than money

Advancing a mission beyond profitability is not only good citizenship, but also competitively advantageous. It deepens brand appeal to consumers and investors. And it distinguishes the brand in the quest for the best and the brightest talent. This category is especially well positioned to accomplish these goals because of technology's power to improve lives.

4. Be socially conscious

People are more mindful that their purchasing activities have consequences— good and bad—across the globe. Young people entering the work force prefer companies that adhere to a Hippocratic oath—Do no harm. The prescription applies across most categories, but it's critical in technology, because of the competition to attract the most highly motivated, brainy young people.

5. Be simple

Consumers move fluidly back and forth between their business and private selves. Or they might be in both spaces simultaneously. They expect their technology to move with them. Make it easy for customers to move among aspects of their lives without waiting for technology to catch up.

6. Innovate effectively

All technology companies innovate. It goes with the territory. But all innovations are not equal. The most successful innovations need to be relevant to the customer, add value and be well timed. The best innovations add a sense of discovery.

7. Cultivate permission

There's often a time gap between consumer expectation and the brand innovation. Brand strength gains consumer permission for the gap to exist. Consumers tend to be more patient with brands known for continuous transformative innovation.

8. Be consistent

Stand for something. Don't keep reinventing the brand. Constant reinvention too often is symptomatic of brands that lack a deep sense of identity and instead shape their identity in reaction to the competition.

9. Change constantly

Be consistent about who you are, but change what you do all the time to meet the needs of consumers and the demands of the market.

10. Harness optimism

Despite the impact of the recent financial crisis, technology still inspires people to feel that future possibilities are infinite. Brands associated with that belief benefit from its momentum.

Technology Down 1%

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 2013

BrandZ Global 2013 Report Top 100 Report

Top 100 Chart

2013 BrandZ Top 100 Infographic

BrandZ 2013 Infographic

Methodology and valuation by Kantar Millward Brown

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