Market cap

* For banks, enterprise value is substituted with market cap. Source: Bloomberg Finance L.P.

Performance of the brand

Microsoft Corporation develops, manufactures, licenses and supports a wide range of predominantly computing related products. Established in 1975 Microsoft rose to domination in the mid-1980s after the release of MS-DOS a home computer operating system. Followed by the Microsoft Windows line of operating systems, Microsoft soon became the leading business in the office suite market with Microsoft office. In recent years the software giant has diversified into the games industry with the Xbox and into the consumer electronics and digital services market with MSN, Bing, Zune and the Windows Phone OS. After its entry into cloud computing Microsoft’s latest diversification is into Microsoft-branded retails stores, the first opening in October 2009.

Microsoft managed to maintain it's AAA+ brand rating in 2011. Whilst enterprise value fell from $230,403m to $182,115m, Microsoft's brand value has increased from $33,605m to $42,805m. Consequently, it is has climbed 3 places in our Global 500 league table, making Microsoft the second most valuable brand.

First choice for business

Microsoft continues to dominate the office suite market with its Microsoft Office range of products being the first choice for businesses. Microsoft’s latest operating system (OS), Windows 7, received a much warmer critical reception than their previous OS Vista and has sold strongly since release. As of May 2011 Windows 7 is installed on around 30% of computers and rapidly gaining on first place - Microsoft’s own Windows XP.

Making up ground with Mango

Originally doing well in the smartphone market Microsoft missed out on the transition to touch screens losing a large amount of ground to Google’s Android in particular. However, there may be a comeback on the cards with Microsoft’s latest version of their Windows Phone 7 (WP7) OS, Mango, a marked improvement. The release of the HTC Trophy with WP7 saw market share grow by 97% and after Microsoft’s technical partnership with handset manufacturing giant Nokia more WP7 phones look set to enter the market.

WP7 will attempt to take market share from Android, after Google’s purchase of Motorola Mobility other handset manufacturers may be pushed into producing more WP7 phones. With such a small amount of phones currently using Microsoft’s smartphone OS the only way is up for WP7.

Skype to supply an advantage

May 2011 saw Microsoft buy leading internet communication business Skype for $8.5bn. Among a host of advantages, the move will give WP7 and Nokia a competitive offering to take on Google Voice and Apple’s Facetime in the smartphone OS market. Further, as businesses start to move away from traditional phone systems to internet calling Microsoft are well positioned with Skype already the market leader.

Slow to innovate

Microsoft’s Internet Explorer has been losing popularity for years and for the first time in ten years more people are using alternative browsers such as Mozilla’s Firefox or Google’s Chrome. With the internet browser quickly becoming the single most important piece of software installed on a computer IE’s decline is a sombre example of Microsoft’s inability to push innovation and keep up with their competitors Apple and Google.

Microsoft’s media platform Zune failed to take off and Bing, Microsoft’s rebranded search engine, has failed to put a dent in Google’s search engine dominance. Late to the game in crucial modern technologies it is of little surprise Microsoft are losing ground to Apple and Google. Apple surpassing Microsoft as the most valuable technology company is the latest demonstration of Microsoft’s failure to break the consumer market and signals an important cultural shift – consumer tastes have overtaken the needs of business as the leading force behind shaping today’s technology. Microsoft will need to address this.

Be What’s Next

In 2010 Microsoft unveiled a new company tagline, ‘Be What’s Next’ in an attempt to rebrand as an innovative company. However with no game-changing products on the way it seems a little difficult to view Microsoft as the company of the future and the branding change, for the moment at least, seems to be in vein.

 

 

Last changed September 2, 2011

League tables

Microsoft appears in the following brand league tables:

Rank 2 in the Global 500 2011.
Rank 5 in the Global 500 2010.
Rank 4 in the Global 500 2009.
Rank 2 in the Global 500 2008.
Rank 2 in the Global 250 2007.