Microsoft Ads Spank Apple, But Does It Matter?

Last Updated May 20, 2009 1:40 PM EDT

Apparently the Microsoft price ads are taking a heavy toll on Apple in perceived brand value, according to research done by BrandIndex, an ongoing consumer perception analysis done by market research firm YouGov. The perceptions of 18- to 34-year-olds has shifted significantly when it comes to PCs versus Macs. But in the long run, how much will that really matter to Apple?

The value ratings that users give to the two product brands have shifted significantly since mid-February 2009, as you can see in the graph (courtesy BrandIndex via AdAge):

The value score is the relative weighting of positive and negative feedback on a brand. A score of zero means that there are equal portions; the higher the score, the higher the positive perception of the brand and whether they feel they get value for the money they spend. And in this demographic that is traditionally considered important to marketers, Microsoft has gone from generally being near or far below Apple to racing ahead. In other words, this wide age bracket sees Microsoft far more positively than Apple. From 35 to 49, perception did shift, but Apple returned to the top. Among those 50 or older, it's a dead heat.

But notice something important in the graph: people were asked about Apple's computers, not consumer electronics such as iPhones and iPods. My colleague Michael Hickins has been arguing that Apple's future is in mobile devices. And although we disagree a bit on how easily Apple will get entrenched in the all important corporate market, there's no mistake that computers are becoming an economically less important product to Apple. Look at the graph of Mac net sales compared to Apple's total net sales (time periods following a calendar year, not fiscal year):

And then look at the percentage of total net sales represented by Mac net sales, with a polynomial trend line:

This isn't to say that Macs are unimportant to Apple. But as overall sales grow, Macs become somewhat less important because Apple is essentially becoming a consumer electronics firm. However, they still carry enough value for the company to be important, which means that the pressure exerted by Microsoft is likely causing economic damage to the company. And given that the real hit Apple has taken in reputation has been since February, it doesn't seem too unreasonable to consider that perhaps the relatively poor showing by Mac sales could have been a result.

There is also another consideration. Upscale brands often create new product lines or even categories to allow consumers who might not pay for the higher end goods to buy into the name. Dropping Mac sales could eventually have an effect on the sales of iPods and, potentially, even iPhones, suggesting that the position the iPhone plays in the Apple panoply is even more important, because it might need to become the company's brand standard in the future, somehow serving as the flagship, even if the price to ride is relatively low, reducing the sense of exclusivity the company can offer consumers.
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