Tech Brands Boom with Expansion Beyond Traditional Domains
Amazon has become the world’s most valuable tech brand, with its value surging by 42% to US$150.8 billion, according to the latest Brand Finance Tech 100 report. Apple (up 37% to US$146.3 billion) has retained second place, and Google (up 10% to US$120.9 billion) has fallen to third place as both Amazon and Apple’s brand value have accelerated ahead.
The huge growth in the brand value of Amazon comes from using technological expertise to expand into many new areas across the broader tech sector, including smart speakers, home entertainment, internet hosting, home automation, music, mobile devices, audio books, live streaming, artificial intelligence, and home security.
David Haigh, CEO of Brand Finance, commented:
“The value of the biggest tech industry brands does not come just from successful marketing campaigns, but rather, they are each based upon an authentic and obsessive focus on their customers. Amazon has built a brand that has no peer, because they provide unmatched convenience, availability, and scale. Their brand is unconcerned with competitors. Instead, it is concerned with removing every possible impediment to customers using their services.”
Amazon’s expansive growth leaves Apple and Google behind
Although Apple defended 2nd place in the ranking, with brand value rebounding to US$146.3 billion after the 27%-decline last year, its future looks challenging. Apple has failed to diversify and grown over-dependent on sales of its flagship iPhones, responsible for two thirds of revenue. Sales of iPhone X have fallen short of expectations, and the model is predicted to be discontinued later this year. With the advent of emerging world brands like Huawei, Apple’s increasing focus on what are effectively luxury products may cost the brand a fair share of the global mass market, limiting the potential for brand value growth.
Google has dropped from 1st to 3rd position, recording a relatively slow brand value growth of 10% to US$120.9 billion. Google’s online ads generated more traffic than expected in 2017 as aggregated paid clicks rose by 43% year on year, boosting revenues. However, presenting a solid performance is not always enough. Google is a champion in internet search, cloud and mobile OS technology but, similarly to Apple, its focus on particular sectors is holding it back from unleashing the full potential of its brand. Google’s investments in self-driving cars and handsets still lack the scale and audacity demonstrated by Amazon’s new ventures. Nevertheless, the acquisition of 2,000 HTC smartphone staffers for US$1.1 billion is a boost for plans to expand in hardware.
Chinese Alibaba, Tencent & Huawei surge in value
Further down the top 10, the trio of Chinese brands – Alibaba (7th, up 58% to US$54.9 billion), Tencent (8th, up 83% to US$40.8 billion) and Huawei (9th, up 51% to US$38.0 billion) – all posted extraordinary jumps in brand value, moving up the tech brand value ladder. Benefitting from dominance in the domestic Chinese market, they have built a strong foundation for global growth.
Alibaba shows no sign of slowing as it plans to invest US$15.2 billion towards its global logistics chain expansion. Also growing quickly, Tencent’s WeChat app and gateway now has over 800 million users, as it has become essential for communication in China. It has leveraged its brand to develop an extraordinary level of vertical product integration, providing a range of complementary services that would require dozens of specialised apps to deliver in Western countries.
The phenomenal global rise by Huawei continues with its smartphone business now firmly in third place behind Apple and Samsung. The core networking business, which delivers the bulk of Huawei’s global revenue, is growing with the expectation of 5G services coming online soon. Since 2012, Huawei has grown nearly 700% from US$4.8 billion to US$38.0 billion, trailblazing Chinese efforts to build home-grown brands with global reach.
Desktop-focused brands lose out
Of the top ten brands, Microsoft (up 6% to US$81.2 billion) and IBM (down 10% to US$32.5 billion) are most closely associated with non-mobile services. Microsoft’s brand is linked to its Windows operating system and Office software primarily used on desktop devices, and IBM to its corporate computer services. While both brands certainly do offer mobile services, they do not yet have the same brand equity in this sector as Amazon, Apple, and Google, and are losing out on the brand value gain that it offers.
Samsung becomes tech sector’s strongest brand
In addition to measuring brand value, the Brand Finance Tech 100 report also analyses brand strength, which indicates what proportion of a business’s revenue is contributed by the brand itself. Samsung (up 51% to US$77.7 billion) jumped several places this year to become the tech sector’s strongest brand with a Brand Strength Index (BSI) of 93.0, an increase from 87.4 in 2017.
