Apple v. Google: The Coming Cloud-Based Conflict

 The Beginning of a Brand War
A seismic shift began in the Tech industry last August with a ripple—when Eric Schmidt (Google’s CEO) resigned from Apple’s board of directors.  It is a conflict from which we’re already beginning to see the fallout, as evidenced by Brand Z’s report released last week, showing Apple’s brand’s growing dominance over Google.

Apple Brand Value: $153 B, 84% growth | Google: $111 B, -2% | Facebook: $19 B, 246%

In their explanation as to why Schmidt was resigning last August, Apple said that, “[Schmidt] would have had to recuse himself from large portions of its board meetings to avoid potential conflicts of interest.”  In other words, Google and Apple were no longer business partners, and their new strategies for 2011 placed them in conflict with one another.
Brand Z’s valuation of the world’s top 100 brands, released last week, seems to be backing Apple in the coming conflict.  The results of Brand Z’s study are pretty stunning: the value of Apple’s brand grew by a staggering 84% in 2010 and was valued at $153 B in Brand Z’s report, catapulting past Google, whose brand actually shrank by 2% to $111 B.  Apple and Google occupy the first and second slots, respectively. According to Brand Z, Apple beat out Google in 2010 to become the most valuable brand in the world.
Facebook was the fastest growing company in the study, with their brand exploding by 243% in the study.  They rocketed out of nowhere to appear as the 35^th ranked brand in the study.  We can expect that with their momentum, they’ll be shooting up the chart even further next year.
Brand Z evaluates all of the key-players in the world economy—from the oil industry to the worldwide shipping industry.  Exxon is number 41 on the Top 100, and Shell is number 51.   Fed Ex and UPS appear on the list ranked 73^rd and 17^th respectively.  So there are competitions and conflicts going on all up and down the list.
The most interesting conflict, however, is between the companies ranked 1^st, 2^nd , and 35^th: Apple, Google, and Facebook.

Cloud Computing: The Next Frontier

Apple, Google, and Facebook: what do these three companies have in common?  What did Apple and Facebook do to multiply their brand value so explosively in 2010?
My speculation: the common link between these three companies—the reason that they rank so high in the list of top Global Brands—is due to the fact that they are emerging as the key players in the coming Cloud-Based Computing revolution.
Sure: Apple had a blockbuster year with the iPad, but I don’t think that that’s the main reason they leapt out in front of Google.  How can a company whose profits have primarily been tied to the sale of hardware jump ahead of Google, who maintains market dominance across all platforms?
Short answer: cloud computing.  I quote from page 84 of Brand Z’s report:
The emergence of cloud computing portends heated competition over who will own the consumer—device or platform.  When the battle was about winning the PC Market, consumers were less concerned about the particular brand of PC or laptop as long as it ran Microsoft Office.  With the cloud, consumers may care less about the brand of their mobile device as long as it can access Facebook.  Apple could be an exception because of the strong emotional and functional appeal of the brand.
Let me unpack a little bit, for our readers here at TechieMania:
Brand Z measures the value of brands according to three metrics—brand-earnings, brand contribution, and brand multiple.

• They look at how much the brand is worth by subtracting capital charges from the total company earnings to determine brand earnings.
• To determine brand contribution they survey consumers in different markets to determine how much of these brand earnings are generated due to the fact that people love the brand vs. other factors like price and location.
• Finally, they perform a dual financial/consumer-based analysis to determine what the growth potential of the brand is.  This last step determines the brand multiple.

Obviously, Apple would have scored very high in the ‘brand contribution’ department.  But my conjecture is that the metric where they scored highest—and the reason for the explosive growth of their brand—was their brand multiple, due to the fact that, in the coming Cloud-Based Revolution “Apple could be an exception.”  In other words, Apple is positioned to ‘own’ the cloud-based revolution.  I’m betting that Facebook’s explosive 246% growth in brand valuation is due to the fact that they are, “one of the largest clouds.”  The hockey-stick growth of Facebook’s brand in 2010 would tend to support my theory that the reason that Apple grew was due to their brand multiple—due to the fact that they’ve got in skin in the game when it comes to cloud development.
Brand Z clues us into the fact that cloud computing was a very important factor in their calculations the section of their report that gives an overview of the activity of Technology brands in 2010.
They write:
Apple grew 84 percent in brand value to become the world’s most valuable brand [surpassing] Microsoft in market capitalization.  With a 246% increase in brand value, Facebook entered the Top 100 for the first time at No. 35.  These developments reflected both the strength of the Apple and Facebook brands and the dramatic changes taking place in the always-dynamic technology sector…Most significantly, the future of storing and accessing data, software and applications suddenly belonged to metaphorical “clouds”… [Consumers, businesses and governments began to shift towards cloud sharing over old-school operating systems]  One of the largest clouds, Facebook, overtook Google as the most visited site in the US last year…
It will be interesting to watch the showdown between all of these companies throughout the coming quarters and next year.
Google and Apple are testifying before congress to allay fears that they are harvesting location-tracking information from SmartPhones.  If they were harvesting this information, they would be able to develop movement-profiles of subscribers that would be extremely valuable for marketing purposes—essentially they would be harvesting the kinds of information that people surrender to Facebook freely: what are their interests, what local companies would they be likely to engage with/buy products from.

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