Apple brand up, Microsoft down – What recession?

Apple defied the predictions of the analysts and the recession, posting increased sales and an overall increase in revenue and profit for the first quarter of 2009. In the same period, Microsoft had its first-ever drop in sales and revenue since they went public 23 years ago. How can this happen? 

Apple sold 2.22 million Macintosh computers, down 3 percent from a year ago and 11.01 million iPods, up 3 percent, and, amazingly, it sold 3.79 million iPhones, up 23 percent!

Regarding brands, this really says that being smaller, more exclusive, and totally focused on an integrated customer experience adds net value. Apple is a different kind of company with a unique product mix crossing the computing, entertainment, mobile connectivity, ecommerce, and electronics categories. Apple succeeds by putting the “Apple Brand Cachet” and functionality into all its products and thus the consumer experience. The user interface, the interaction between devices and with iTunes and the iTunes store, the software apps that work on the iPhone and integrating with your Mac Book—all this makes for a branded, higher-value product experience—a must-have value you can’t get with any other brand.

Microsoft, on the other hand, has 93% of the operating system and desktop applications for PCs. They can only compete against themselves and they do this very poorly (the initial introduction of the Vista operating system shows this). They are the forced-to-have-it-brand with no real devices, a poor browser experience and no serious focus on integrating consumer experiences. Their growth will be tied directly to business cycle growth. When companies expand or consumers need to buy a new laptop, they will get a new Microsoft OS and upgraded apps  because they have to.

By contrast, Apple is a user-centric brand and focuses on a consistent customer experience. It’s positioned as an indispensable lifestyle brand connecting the operating system, the applications, mobility and the devices into one brand experience that’s much more than a PC. As consumers integrate more of these experiences Apple has the opportunity to continue to lead in providing more products to support a connected consumer life style. This is not about business cycles, it’s about delivering on consumer expectations.

The responsive players—the brands that understand consumer experience—are the ones that innovate in highly competitive markets. They are the winners in this new world of brands that focus on integrating into and following the consumer experience not dominating it.