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Amazon’s Amazing Brand Hits Record Value

·         Valued at over US$150 billion, Amazon becomes world’s most valuable tech brand, leaving Apple and Google behind

·         Chinese tech brands surge in value, with Alibaba, Tencent & Huawei climbing Brand Finance Tech 100 ranking

·         Samsung beats out competitors to become tech sector’s strongest brand

View the full list of the world’s 100 most valuable tech brands here

Amazon has become the world’s most valuable tech brand, with its value surging by 42% to US$150.8 billion, according to the latest Brand Finance Tech 100 report. Apple (up 37% to US$146.3 billion) has retained second place, and Google (up 10% to US$120.9 billion) has fallen to third place as both Amazon and Apple’s brand value have accelerated ahead.

The huge growth in the brand value of Amazon comes from using technological expertise to expand into many new areas across the broader tech sector, including smart speakers, home entertainment, internet hosting, home automation, music, mobile devices, audio books, live streaming, artificial intelligence, and home security.

David Haigh, CEO of Brand Finance, commented:

“The value of the biggest tech industry brands does not come just from successful marketing campaigns, but rather, they are each based upon an authentic and obsessive focus on their customers. Amazon has built a brand that has no peer, because they provide unmatched convenience, availability, and scale. Their brand is unconcerned with competitors. Instead, it is concerned with removing every possible impediment to customers using their services.”

Amazon’s expansive growth leaves Apple and Google behind
Although Apple defended 2nd place in the ranking, with brand value rebounding to US$146.3 billion after the 27%-decline last year, its future looks challenging. Apple has failed to diversify and grown over-dependent on sales of its flagship iPhones, responsible for two thirds of revenue. Sales of iPhone X have fallen short of expectations, and the model is predicted to be discontinued later this year. With the advent of emerging world brands like Huawei, Apple’s increasing focus on what are effectively luxury products may cost the brand a fair share of the global mass market, limiting the potential for brand value growth.

Google has dropped from 1st to 3rd position, recording a relatively slow brand value growth of 10% to US$120.9 billion. Google’s online ads generated more traffic than expected in 2017 as aggregated paid clicks rose by 43% year on year, boosting revenues. However, presenting a solid performance is not always enough. Google is a champion in internet search, cloud and mobile OS technology but, similarly to Apple, its focus on particular sectors is holding it back from unleashing the full potential of its brand. Google’s investments in self-driving cars and handsets still lack the scale and audacity demonstrated by Amazon’s new ventures. Nevertheless, the acquisition of 2,000 HTC smartphone staffers for US$1.1 billion is a boost for plans to expand in hardware.

Chinese Alibaba, Tencent & Huawei surge in value
Further down the top 10, the trio of Chinese brands – Alibaba (7th, up 58% to US$54.9 billion), Tencent (8th, up 83% to US$40.8 billion) and Huawei (9th, up 51% to US$38.0 billion) – all posted extraordinary jumps in brand value, moving up the tech brand value ladder. Benefitting from dominance in the domestic Chinese market, they have built a strong foundation for global growth.

Alibaba shows no sign of slowing as it plans to invest US$15.2 billion towards its global logistics chain expansion. Also growing quickly, Tencent’s WeChat app and gateway now has over 800 million users, as it has become essential for communication in China. It has leveraged its brand to develop an extraordinary level of vertical product integration, providing a range of complementary services that would require dozens of specialised apps to deliver in Western countries.

The phenomenal global rise by Huawei continues with its smartphone business now firmly in third place behind Apple and Samsung. The core networking business, which delivers the bulk of Huawei’s global revenue, is growing with the expectation of 5G services coming online soon. Since 2012, Huawei has grown nearly 700% from US$4.8 billion to US$38.0 billion, trailblazing Chinese efforts to build home-grown brands with global reach.

Desktop-focused brands lose out
Of the top ten brands, Microsoft (up 6% to US$81.2 billion) and IBM (down 10% to US$32.5 billion) are most closely associated with non-mobile services. Microsoft’s brand is linked to its Windows operating system and Office software primarily used on desktop devices, and IBM to its corporate computer services. While both brands certainly do offer mobile services, they do not yet have the same brand equity in this sector as Amazon, Apple, and Google, and are losing out on the brand value gain that it offers.

Samsung becomes tech sector’s strongest brand
In addition to measuring brand value, the Brand Finance Tech 100 report also analyses brand strength, which indicates what proportion of a business’s revenue is contributed by the brand itself. Samsung (up 51% to US$77.7 billion) jumped several places this year to become the tech sector’s strongest brand with a Brand Strength Index (BSI) of 93.0, an increase from 87.4 in 2017.

View the full Brand Finance Tech 100 report here

ENDS

Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 100 most valuable brands in the world are included in the Brand Finance Tech 100 league table.

Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.

More information about the methodology as well as definitions of key terms are available in the Brand Finance Tech 100 report.

Data compiled for the Brand Finance Tech 100 league table and report is provided for the benefit of the media and is not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts

Sehr Sarwar

Communications Manager

T: +44 (0)2073899400

M: +44 (0)7966963669

s.sarwar@brandfinance.com

Konrad Jagodzinski

Communications Director

T: +44 (0)2073899400

M: +44 (0)7508304782

k.jagodzinski@brandfinance.com

About Brand Finance      

Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.

Methodology

Definition of Brand

Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post-tax to a net present value which equals the brand value.

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