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Microsoft Pri0

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March 20, 2008 at 11:35 AM

Survey: Microsoft’s corporate brand declining steadily since 2003

A survey of U.S. corporate brand recognition and favor shows Microsoft on a five-year skid, even as it ranks highly on other such lists.

Stamford, Conn.,-based CoreBrand just released the latest results from its survey of U.S. business leaders, showing Microsoft fell from 38th in 2006 to 59th last year, just behind Fruit of the Loom among U.S.-based corporate (as opposed to product) brands.

Google ranked 195th, Apple was 118th and IBM came in 18th. While the comparison with other companies is interesting (top 100 listed in this PDF), the data behind Microsoft’s ranking is even more so.

First, a bit of background on CoreBrand’s methodology:

CEO Jim Gregory said the company conducts telephone surveys with business leaders — defined as VP-level execs and above — at the top 20 percent of U.S. companies. It conducts thousands of interviews a year to gain insight into 1,200 U.S. companies in 49 industries. It’s been doing it this way since 1990, Gregory said.

Survey respondents are asked to rate their familiarity with a series of companies. Respondents who are sufficiently familiar with a given company are then asked to rate its overall reputation; their perception of its management; and investment potential. About 400 respondents rate each company.

CoreBrand uses that data to create familiarity and favorability scores, which are combined to establish a single “Brand Power” score of one to 100, Gregory said. Companies are ranked on CoreBrand’s list by this score.

Microsoft hit its peak in Brand Power at 81 in 1996 — the year after people lined up at midnight for Windows 95 — and drifted down to the 76-77 range from 1997 through about 2003, he said. “Brand Power that high is quite strong.”

From 2000 to 2003, the company’s rating for perception of management increased. Recall that current CEO Steve Ballmer took over from Chairman Bill Gates in January 2000.

But beginning in 2003, the company’s Brand Power ranking started a decline that has continued through 2007. Its score declined from 76 in 2004 to 69 last year.

“It’s not so much an issue of familiarity because they still are nearly universally known, but their favorability is what is dropping off,” Gregory said. “… We see a trend here that is really disturbing for a company that is as strong as Microsoft and such an important corporation.”

Gregory’s data doesn’t indicate what specifically is behind the decline in Microsoft’s brand. He suggested in a press release that Apple’s “I’m a Mac” campaign had something to do with it, but that by itself wouldn’t account for the longer-term trend. Some other possibilities we discussed include a hangover from Microsoft’s antitrust battles, security lapses in Windows XP and the delays and underwhelming response to Windows Vista. Feel free to add your perceptions of Microsoft’s brand and what might be behind CoreBrand’s numbers in the comments.

Asked about CoreBrand’s analysis, a Microsoft spokeswoman pointed to three recent corporate branding surveys that rank Microsoft in the top 10.

Microsoft ranked first in a public vote of 3,265 consumers in the U.K.

Microsoft was second in an Interbrand and BusinessWeek list that evaluated a company’s global brand “on the basis of how much it is likely to earn for the company in the future.” They used analysts’ projections, company financial documents, and Interbrand’s “own qualitative and quantitative analysis to arrive at a net present value of those earnings.”

In a Breakaway Brands survey measuring growth in brand strength from 2003 to 2006, Microsoft ranked 10th. This one started with brand strength based on surveys of 9,000 consumers and tracked the change over time. It also added data on a brand’s financial contribution to each company’s market value. See coverage from Fortune, which ascribed Microsoft’s improvement to consumer-friendly products including the Xbox, the work of the Bill & Melinda Gates Foundation and a general softening of the company’s image.

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