Trust is the foundation to which all businesses are built upon. Whether we're talking about a retailer, a biotechnology company, or a smartphone producer, no company can thrive without earning the trust of its customers.
Of course, earning that trust can be difficult, especially nowadays when trust isn't easily given by the consumer. Within the past couple of years we've witnessed numerous letdowns of consumer trust, from credit card network breaches at Target, JPMorgan Chase, and most recently Home Depot, to book-cooking scandals that plagued more than a dozen Chinese small-cap stocks in 2011. Companies today need to be able to convey to consumers that they not only can deliver a premium product and are concerned about the environment and other key social issues, but that they can also protect their data.
Measuring trustworthiness in the tech sector
Few sectors deal with this challenge more regularly than the technology sector which is essentially the heart and soul of data protection and which provides the backbone for most businesses: their IT infrastructure.
Within this list you'll find plenty of predictable tech brands within the top 25. Canon at the No. 23 spot, Sony at No. 22, IBM at No. 20, Hewlett-Packard at No. 18, and Microsoft (NASDAQ:MSFT) at No. 11.Yet, measuring a company or its brands' trustworthiness isn't always easy, especially in the tech sector where we don't often think about tech companies as a brand. In order to get a better feel for what tech brands are most trustworthy I turned to Forbes, which recently listed the 100 most trustworthy brands (all sectors included).
Take Microsoft as a great example in the 11 spot. While Microsoft may not be well-liked if you're a Mac user or prefer the Linux operating system, you can't argue against Microsoft's ability to produce consistent profits for shareholders on the heels of its still-dominant Windows operating system. When it comes to the potential for accounting issues, the potential for bankruptcy, or a material event really weakening Microsoft, these factors all rank extremely low thanks to its $61.7 billion in net cash and more than $32 billion in operating cash flow over the past four quarters. Microsoft is nearly as steady as they come, and thus a high-ranking company on Forbes' list of most trustworthy brands.
Can you guess tech's most trustworthy brand?
Still, Microsoft didn't even crack the top 10. In fact, two tech companies ranked even higher than Microsoft. Would you care to place your guess which one ranked highest on the list?
If you said Apple (NASDAQ:AAPL) you've astutely and correctly picked one of the two tech companies ranked higher than Microsoft, but you didn't choose the top-ranking tech brand for trustworthiness. According to Forbes, the one factor that appeared to hold Apple, arguably one of the most cutting-edge innovative brands with the iPhone, iPad, and now iWatch and Apple Pay, back was its weak rankings when it comes to environmental sustainability. Somehow I personally doubt that'll slow the almost cult-like following for Apple, which manifested in more than 10 million iPhone 6 sales during the first weekend of its release (another new record), but it was enough to pull Apple below the top spot for trustworthiness in tech.
Why Google takes the crown
If, however, you said Google (NASDAQ:GOOG) (NASDAQ:GOOGL), then to quote the knight guarding the holy grail in Indiana Jones and the Last Crusade, "You have chosen ... wisely!"
Should Google really come as that much of a surprise? Probably not considering it has an absolute lion's share of the search market. According to comScore, which tracks search engine rankings on a monthly basis, Google retained 67.3% of all search queries in August 2014, compared to 19.4% for Microsoft's Bing, 10% even for Yahoo!, and 3.3% split between two other search engines. Consumers flock to brands they trust, and this huge search gap is an indication that Google is the trusted search source for Internet users.
But, Google is now so much more than just a search company. Google is an even more dominant beast when it comes to global operating system market share for smartphones based on figures from IDC. Per IDC's second-quarter statistics, Google's Android OS comprised 84.7% of all smartphone OS', well ahead of Apple's iOS at 11.7%. To add further context to Google's smartphone OS dominance, in Q2 2011 its market share at the time was a mere 36.1%.
Google also owns popular video site YouTube and runs social media site Google+ which had more than 300 million monthly active users as of a year ago.
Long story short, Google has no trouble attracting and hanging onto consumers because it gives its customers little reason to worry. Google is well financed with $50 billion in net cash and slightly more than $20 billion in operating cash flow generation over the previous 12-month period. Furthermore, because it's the dominant force in search and smartphone OS it would be unlikely to find its business model in jeopardy anytime soon, which makes it a potentially strong investment candidate.
Additionally, Google is a champion of going green. According to its Google Green initiative, the company notes that its data center servers use 50% less energy than most other data centers, and that 35% of its overall energy consumption now comes from renewable sources. Conveying a genuine interest in the environment is a good way to keep consumers happy and help deliver on the aforementioned trust factor.
"Will Google be able to hang onto its crown," you wonder? While I don't have a crystal ball, I'd certainly suggest it's not likely to lose its high-ranking anytime soon. Though Apple may still have more of a cult-like following, as well as a monstrous net cash position, it lacks the Internet-based dominance on a global basis that Google can provide.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool recommends Apple, Google (A shares), Google (C shares), Home Depot, and Yahoo. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), International Business Machines, JPMorgan Chase, Microsoft, and Yahoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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