Report: Apple Inc. Brand Now Less Valuable Than Rival

Apple (NASDAQ: AAPL  ) is no longer the world's most valuable brand, according to Millward Brown's annual BrandZ report (via The Telegraph). Which company beat out Apple for the top spot in 2014? Google (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) . After holding the top spot for three years, Apple finally handed over the title to one of its leading rivals. Should Apple investors be concerned?

The study
Obviously it is incredibly difficult to measure the value of a brand. But the excellent methodology behind BrandZ's ranking makes this particular study worth noting. Not only does Millward Brown analyze financial statements and attribute the portion of earnings that belong to a brand to its respective value, but the research firm also analyzes in-depth consumer opinions about brands. It's this consumer research that differentiates the BrandZ rankings from the rest.

As Millward Brown explains on its website:

The BrandZ valuation methodology can be uniquely distinguished from its competitors by the way we obtain consumer viewpoints. We conduct worldwide, ongoing, in-depth quantitative consumer research, and build up a global picture of brands on a category-by-category, and country-by-country basis.

Our research covers two million consumers and more than 10,000 different brands in over 30 countries. This intensive, in-market consumer research differentiates the BrandZ methodology from competitors that rely only on a panel of "experts" or purely financial and market desk research.

Given Apple's monstrous earning power, the company typically dominates brand studies. In Forbes' list of the most valuable brands, for instance, top-ranked Apple had a brand value just over $104 billion as of November 2013, more than doubling the $57 billion brand value of runner-up Microsoft. Forbes' methodology for finding the value of a brand, though, was based almost purely on financial results.

So what happens when you include consumer sentiment as a major factor in brand value? Apparently, the results work out in Google's favor -- at least they do this year. Google's brand value soared 40%, year over year, according to BrandZ. Meanwhile, Apple's brand value fell by 20%. These changes put Google at the top of a list with a brand value of $158.8 billion, with Apple at $147.8 billion.

The bigger picture
The glass-half-empty view of the study could point to the beginning of Apple's end. "Is Apple losing its cool among consumers?" this view asks. But the glass-half-full view paints quite a different portrait: The world's most in-depth (and possibly most accurate) brand study portrays Apple as the world's No. 2 brand, as well as the world's most valuable consumer electronics pure play. This view applauds the company for its continued strength among the top-ranked brands.

Even more, it could be argued that Apple is poised to address the major factor holding its brand back. Examining the results, Millward Brown asked an important question: "Google has knocked Apple off its perch after three years at the top. Apple is performing well but is it still redefining technology for consumers?" Apple may soon answer that question, as CEO Tim Cook has promised the company will launch products in entirely new categories this year. If rumors are true, one of those products may be some sort of smartwatch -- new territory for Apple that gives it a chance to show the world it can still innovate.

Should Apple investors be concerned about the results of the BrandZ study? Not at all. Apple's conservative valuation has already priced in the uncertainty about whether it can still redefine technology for consumers. If Apple delivers on this concern, the potential upside for investors could be very lucrative.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 25, 2014, at 4:38 PM, GaryDMN wrote:

    Google isn't a rival, they are an advertising company, they compete for ads with the media. Apple is a product company and Google doesn't have a single significant successful product. The make over 90% of the profit from ads.

  • Report this Comment On May 25, 2014, at 6:11 PM, johnestromjr wrote:

    Amazing. Everyone seems to be hopping on the Millward Brown nonsense of Google being THE most valuable brand. Based on what? The ONLY product Google makes any money from is via ad revenues from clicks on their search engine. They make no money from their OS which most of the world uses. They make no money from Next, they make no money from Google Glass yet "pundits" and "experts" like Millward Brown are believed? Folks, Apple is heads and shoulders about Google, is FAR more innovative and recognized all over the world. Google isn't innovative, isn't nearly as profitable [anyone remember Motorola? Now sold to Lenovo?] and self driving cars are many years away - at best. And who the heck is Millward Brown? Until their assessment of Google being THE most valuable brand I'd never heard of them. This is a desperate cry to be noticed by a nothing Millward Brown.

    Daniel Sparks, you and The Motley Fool shouldn't give this nonsense the time of day. It's ALL hogwash.

  • Report this Comment On May 26, 2014, at 12:31 AM, HiramWalker wrote:

    You would think the most valuable brand would provide the most value, but not here. Any one of these "poll results" can be tweaked and weighted to make any brand (otherwise known as a "client") the most "valuable". Samsung has used these "information researchers" to bolster its image, and Google takes a cue. Surprised? Independent research died years ago, and pseudo independence (bought and paid for) is the hallmark of today's web information.

  • Report this Comment On May 26, 2014, at 7:30 AM, shortmanfl wrote:

    Google is not a brand. Nike is. Apple is. Oakley is. I use my Apple products to search. The Google founders , I believe, are former Apple execs that took their technology learned at Apple to start up Google. Jobs was upset by their defection and deception. Adobe is a similar situation. Apple, thank you .

  • Report this Comment On May 26, 2014, at 11:18 AM, dlwatib wrote:

    Yes, folks, get used to it. Apple has been toppled. Google has been doing exciting new research in all sorts of areas while Apple has been treading water. And they've been giving people lots of tantalizing freebies to build consumer loyalty while they develop new monetization streams. Not only that, but some of those freebies make it easier for other companies like Samsung to compete against its rivals Microsoft and Apple. Great way to win friends and influence people, Google!

    People are waiting impatiently for the next iPhone to make it out of Apple into the real world, but even when it gets here, it will just be another smartphone, no matter how big the screensize is. Meanwhile Apple has been destroying their innovation credibility by suing the he!! out of Samsung over trivialities. Bullying is not a good way to build a brand.

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