Apple loses $39 billion in brand value, but Microsoft loses out to AT&T

Brand Finance have posted their yearly list of the world’s 500 most valuable brands, and this year it features a major shake-up, with Google taking over the top spot from Apple, who held it since 2011, after Apple lost $39 billion in brand value, and Google gained more than $21 billion Year on Year.

Brand Finance writes:

Apple was once a paragon of branding excellence. … Loyalty and advocacy reached cultish proportions with fans waiting days outside Apple stores for the latest release. However, Apple’s evangelists are beginning to lose their faith. The snaking queues of early adopters have shrunk almost to the point of invisibility. Apple has failed to maintain its technological advantage and has repeatedly disillusioned its advocates with tweaks when material changes were expected.

Put simply, Apple has over-exploited the goodwill of its customers….. Its brand has lost its luster and must now compete on an increasingly level playing field not just with traditional rival Samsung, but a slew of Chinese brands such as Huawei and OnePlus in the smartphone market, Apple’s key source of profitability.

Brand Finance’s analysts had remained bullish about Apple’s potential to recover its lost momentum, but the rot has now truly set in, with brand value falling 27% since early 2016 to US$107 billion, which sees it lose its status as the world’s most valuable brand.

Apple’s loss was Google’s gain, with Google remaining largely unchallenged in its core search business, and growing its brand equity by 2 points.

Microsoft dropped from 4th to 5th position after AT&T added 45% to their brand value, vs 13% by Microsoft. AT&T expanded to South America and Mexico, and also expanded its brand via its purchase of DirectTV, and is now the most valuable Telecom brand, ahead of Verizon.

Hopefully we can see Microsoft’s performance improve in 2017, after a very positive second half of 2016, marked by the introduction of the much lauded Surface Studio.

Brand Finance calculates the values of the brands in its league tables using the ‘Royalty Relief approach’. This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand, i.e. what the owner would have to pay for the use of the brand—assuming it were not already owned.

The full 7 step methodology and report can be read here.