What's in a Logo?

Sooner or later, any company that reaches success and prosperity is going to change its brand identity. That's what has happened in recent weeks as two of the biggest tech names, Microsoft (Nasdaq: MSFT  ) and eBay (Nasdaq: EBAY  ) , modified their logos. The changes were fairly modest, but they possibly indicate where the two companies would like to be headed.

21st-century makeover
For both Microsoft and eBay, it was time to spruce things up a bit. The latter has been using the same logo since the company's founding in 1995. Microsoft's soon-to-be-gone insignia is older than a goodly chunk of its user base -- it dates all the way back to the Dark Ages of 1987, when few people had heard the word Internet or seen a cell phone outside of certain Oliver Stone movies.

The new Microsoft emblem is a departure in that it uses color, in the form of a squared-out, abstract version of its four-panes-of-glass graphic (historically used only for Windows). That's married with a sober, straightforward type font, with the company name in cool gray lettering.

The color squares are the interesting part. They give the impression of a company trying to be jazzy and fresh. No wonder: It's about to roll out a slew of new and updated products, including but not limited to Windows 8 (desktop and mobile), the iPad-chasing Surface tablet, expanded services for Xbox, and the umpteenth version of Office.

Microsoft will never be like Apple, expertly capitalizing on months of speculation and hype to unveil a hot new piece of hardware to the world. For many consumers, Microsoft is a staid company selling buggy software and copycat hardware. No matter how hard it tried, it couldn't build up a steady, humming buzz for Surface. And it probably won't for its other goods. Those color squares seem to imply that it would really, really like to, though.

Reducing the wacky factor
eBay's traditional logo, which will be consigned to history starting in October, features a jaunty, uneven slap-together of the four letters that comprise its name. That's strongly reminiscent of the 1990s dot-com era, when Internet enterprises were supposedly breaking the mold of what a company was expected to be. For a brief, thrilling moment, the "New Economy" seemed as if it would rewrite the traditional rules of profitability and cash management.

It didn't. More often than not, e-companies with weak or nonexistent fundamentals burned through the money that hopeful investors shoveled to them, and it quickly turned to ash. In many instances, these were the companies with the goofy logos and the e at the beginnings of their names -- the ones defying corporate tradition and proper capitalization like the upstarts they were.

eBay is one of the survivors of that era, so much so that now it's getting to be a mature business -- hence the shift to a more sober, business-y logo. The impression is of a company that wants to remain a little irreverent -- each letter still has its own primary color -- but taken as an entity that's straight and serious about how it makes money.

To be fair, eBay deserves it. The company has grown sensibly and well over the years, moving from a site heavily based on auctions to a more traditional marketplace where "BUY IT NOW" adorns more and more sale items. It's been admirably selective with the acquisitions it's made, keeping the overall company focus tight and synergistic -- the prime example being the highly complementary PayPal, now far and away the best-growing of the company's business units.

As a result of all this, eBay has maintained more or less steady top-line growth over the years while posting healthy net margins. It's still the go-to site for customers sniffing out deals on everything from paperweights to used DVDs to model airplane kits.

Flowers and waves
The sober-typeface trend has been rolling for a while, often accompanied (as with Microsoft) by a graphic rich in symbolism. This was probably the thought behind oil multinational BP's (NYSE: BP  ) redesign in 2008, when it wedded a stripped-down version of its initials with something that looked like an abstract sunflower. That implied environmentalism, a bow to the green movement. That decision, however, became cruelly ironic amid the company's Deepwater Horizon oil disaster of 2010.

One of this century's most notable logo changes was the one from PepsiCo (NYSE: PEP  ) , also in 2008. The thick lettering that once emphasized the company name was thinned out (a la Microsoft and eBay 2012), and its symbolic wave was given more curl.

Pepsi has little choice but to run in a fresher and wavier direction, because its eternally unbeatable rival, Coca-Cola (NYSE: KO  ) , is seen as the product of longevity and tradition. It's one of those iconic American brands and, as such, the incumbent product. (Although its younger rival makes plenty of money selling goods that aren't beverages, it's forever identified with soda.) Pepsi has little choice but to appear as the more dynamic of the two companies, simply as a way of distinguishing itself.

Not surprisingly, Coke's logo has remained the same since the late 1800s -- save, of course, for the famously disastrous detour that was New Coke in the 1980s.

Reflections in windows
It says something about a company's longevity and success that it even has a strongly identifiable logo, and that consumers take notice when it's changed. More interesting, it also provides a glimpse at a company's personality, as well as its hopes and ambitions for the future. This seems to be the case with both Microsoft and eBay. Investors and tech watchers, take note as you sip that Pepsi adorned with the funky graphic.

New artwork aside, Microsoft will be one of the top American blue chips to watch over the coming months as it rolls out a big slate of fresh products. Now more than ever it's important to keep an eye on the company, and there's no better way to do that than by reading our premium report on its stock. For only $9.99, this rigorous analysis includes a full year of quarterly updates. For more info, click right here.

Fool contributor Eric Volkman owns no shares of any of the shares mentioned in this article, but now that he thinks about it, he could really go for a cold Pepsi. The Motley Fool owns shares of Microsoft, Coca-Cola, and PepsiCo. Motley Fool newsletter services have recommended buying shares of eBay, Microsoft, Coca-Cola, and PepsiCo and creating a synthetic covered call position in Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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