Brand Finance ® Brand Stories

Google vs Apple – “ Rise of the Machines”

‘Rise of the machines’Google vs Apple

Technology has been the key sector in this year’s BrandFinance® Global 500. Twenty years ago, technology brands were very much on the periphery and rarely featured in a consumer-facing context. The 2011 study clearly illustrates how dramatically this picture has changed in the last two decades. From work-place tools and entertainment platforms, technology brands now define the way developed nations carry out many daily activities, from socialising and interacting to shopping and banking. Reflecting this dominance, Google has replaced Wal-Mart at the top of the list and now tussles with other tech giants for dominance.

The most high-profile of these rivals is Apple. Founded in 1976 in Cupertino California, Apple now has 46,600 employees (as of September 2010) and worldwide annual sales of US$65.2 billion. The company has fostered a brand image that actively sought to reject the traditional perception of Microsoft as staid and corporate. As Apple’s portfolio ofproductsbroadenedinthe2000s,withtheiPod,iPhoneand the iPad, the careful cultivationof thisimage has continued, with Apple positioning itself as the lifestyle brand of choice for young, urban, creative people.

However this is more than hollow marketing spin, Apple commands the kind of devotion other brands can only dream of, with new store openings

accompanied by scenes of near hysteria. A recent BBC documentary revealed that Apple devotees show brain activity consistent with those who venerate religious iconography when discussing their favourite Apple products.

Apple has permeated mainstream society to the point that it has worldwide, near fanatical fanbase; summarised neatly by a quote from the UK’s Bishop of Buckingham who stated, ‘Christianity you have to wait for the second coming…with Apple it happened in 1997’ in reference to the return of Steve Jobs, who has been central to Apple’s success. Apple overtook its arch rival Microsoft’s market value for the first time, in 2010.

However, just as Apple has bested one rival, another has usurped its position in the technology world. Google, launched in 1998, initially just as a search engine service. It rapidly grew in popularity through the early 2000s, capturing market-share from rivals such as Yahoo!. However, following its initial public offering in 2004, the company moved into a different league. US$1.67 billion worth of shares were sold, giving Google a market capitalisation of overUS$25billion.NotonlydidthismakemanyofGoogle’s employees paper millionaires overnight, but it would help finance the continued growth and spate of acquisitions that Google undertook, including the acquisition of online video-sharing site YouTube in 2006 for US$1.65 billion of stock. Google

31 © Brand Finance plc 2011

has diversified its own services hugely. From just a search engine in the late 1990s, Google now offers maps, digitised books, news, email, translation services and much more besides. It is the world’s most visited website.

Despite its prowess within the technology world, Google would not instantly seem to be a direct competitor for Apple, whose focus has been mainly on hardware and operating systems. However just as Apple has launched the iPhone, Google hasreleased its own mobile operating system, Android. In contrast to Apple’s generally tight control, Google has adopted a more open strategy with fewer restrictions on application developers and a wide range of handset providers, the most notable being HTC. This strategy appears to have been hugely successful and Android now has overtaken Apple in terms of handset sales. However, reports of the iPhone’s decline are almost certainly premature, as in terms of revenue Apple remains unchallenged. Its earnings for the last quarter were US$11.9 billion in contrast to Google’s US$1 billion.

32© Brand Finance plc 2011© Brand Finance plc 2011

www.brandfinance.com

The world’s leading independent brand

valuation consultancy