(Dateline: USADC - SOCOM-IIA20040922)

Which product would you prefer:

Long Haul trucks: Kenworth or Peterbilt?
Household products: Ivory or Joy?
Fast Food Restaurants: KFC, Pizza Hut, or Taco Bell?

Don't care? Recognize the brands? Think they're all the same?

If you did you would be right - at least on the corporate level. Kenworth and Peterbilt are owned by Kenworth. Proctor Gamble owns both Ivory and Joy - along with many other common brands you see every day. And Taco Bell, KFC and Pizza Hut? All a part of the same family. So does it really matter which one you prefer? Not to the companies that own them.

It is not unusual for companies to have many brands. While it maybe standard business practice, the multi-branding of American corporations is not widely understood in Joe EveryDay's living room. Brand awareness is big business. That percentage of the population who are aware of the existence of a given brand or company helps drive market share.

Along with brand awareness comes brand association: for those brands that might elicit a spontaneous positive reaction - Apple Computer, PeterBilt trucks, Joy, Palmolive, Godiva Chocolate - brand recognition is highly desirable, extensively pursued and protected. It brings that intangible 'Good Will' and a positive brand awareness will spur sales and create brand loyalty. It is common that consumers use the terms 'product' and 'brand' synonymously.

A brand can also elicit a spontaneous negative reaction - think Yugo automobiles - and, to some degree, Microsoft. These feelings, beliefs and knowledge that customers have about brands come about as a result of either personal experiences or perceptions of expectations based on the reported experiences of others.

This brand association can affect multiple products if a company is structured in a monolithic organization where all of the company products are contained under a single company name - as in the case of Microsoft. The mention of Microsoft Windows software may elicit a similar response as the mention of the Microsoft Xbox game station.

The same holds true for Apple Computer. Mention the iMac and the iPod and you get similar responses.

With Microsoft, the reaction is probably frown and a curse. With Apple, it's more likely a smile and a nod.

Multi-branding is not as common in the computer industry. Usually when one company merges or gets taken over by another in the electronics industry, one company will dominate and either absorb and re-brand the existing product or end-of-life it and cease production. During the past few months it has become apparent that the 'rivalry' between two of the computing world's premier forces may not be a real rivalry at all.


What If:

In 1997, Microsoft invested $150 Million dollars in Apple Computer. At the time, there appeared no understandable reason for Bill Gates to turn over the spare change he found is his pants to Apple. According the the article by Dwight Silverman, copyright 1997, Houston Chronicle, at the time it was reported:

"In an attempt to revitalize Apple, which has seen sales of the Macintosh plummet and its market share implode, company co-founder Steve Jobs told an astonished crowd at the MacWorld trade show in Boston Wednesday that Microsoft would invest $150 million in Apple, and the two companies would share and license each other's technologies."

To many, it appeared that Steve Jobs had sold his soul to the devil . . . and given him the keys to the corporate closet as the same time. Perhaps. But what if the 'investment' was not just an investment but the initial payment toward an agreement that would make Apple, in essence, another 'brand' of Microsoft. Apple would be the developer of new technologies, the frontrunner in gauging consumer attitudes and desires. Microsoft would concentrate on the corporate world - businesses and banking, as it were. Microsoft the corporation would take no real risk beyond the initial monetary investment. If anything Apple did caused panic in the computer world, Microsoft could deny culpability and protect it's brand's customer from competitors.

Microsoft has been accused many times of "ripping off' ideas first displayed by Apple. The initial graphics user interface used in the Windows operating system was the genesis of the original lawsuit by Apple against Microsoft.

Digital music is another area where Apple developed a market and Microsoft will now enter. Microsoft has announced it's own version of digital music player to compete with Apple's industry-leading iPod. Most recently, Microsoft has released a beta version of it's music download service, again designed to compete with the Apple iTunes Music Store. Commentators and users alike have derived Microsoft for producing something that not only operates like the iTMS, but has a very similar look and feel as well. Microsoft, for it's part, does not deny that it used the Apple product as the basis for it's own store.

Apple is in the process of developing it's next generation operating system, code named Tiger. It is expected that it will ship during the middle of 2005. Microsoft, as it is prone to do, is developing the next generation of Windows, code named Longhorn, scheduled for shipment in 2006. Microsoft has delayed the shipment of Longhorn several times during the past year and now has reportedly removed some of the more promising technology from the software in an effort to provide it's consumer base a more robust and secure operating environment in advance of 2006. Many of the announced 'features' of Longhorn are very similar to those of Tiger.


Apple, for it's part, during the time after that initial investment and the return of Steve Jobs, has created a brand that stands apart from the rest of the computer industry. The Apple brand has delivered products that promises the simplest, most single-minded experiences possible: Apple = Quality. Apple = Ease-of-use. Apple = It Just Works.


The Apple Experience: If a brand is truly defined by it's perception among it's intended consumer base, then Apple perfected the entire personal purchase experience. It didn't matter which product was purchased, it was the attention to detail that customers first experienced. Just the act of opening the package became a part of the the Apple Experience. The labeling of the box, the layout of the contents, the sequence of using the item, all exuded the sense of care. From packaging to shipment, iPods to iMacs, retail stores to website, Apple provide a positive and consistent experience.

Couple this with positive print comment and word of mouth and Apple has a strong brand identity. The white lines leading to the ear-buds from the iPod are immediately recognizable on the street and the iPod silhouette ads are so effective that they are being copied by other companies in completely different industries.


What Does it Mean?

Microsoft 'invests' in Apple to the tune of $150 million dollars in 1998.

Apple then develops a positive brand image and unique personality with innovative new products. Apple sets trends with products such as the iPod where no need exists. Apple takes the risks to open a new distribution model with the iTunes Music Store when no one wanted it. Apple develops a new operating system that is secure and virus free while Windows attacks grew at 400% in a single year.

Where Apple leads, Microsoft follows and eventually takes over. Apple takes the risks. Microsoft takes the long-term market share and profit.

If Microsoft gains market share in these market and Apple loses - its no loss.

If Apple continues to gain market share in the markets and Microsoft loses - its no loss.

Microsoft only had to pay $150 million for the privilege.

Does Microsoft = Apple = Microsoft?





Posted at 09:36 PM     View Full Text   |   | | |