Post #7: The brand and the platform

Interbrand published earlier this week its annual list of the world’s most valuable brands. It is perhaps of no surprise that four of the top-five names in its list are technology businesses (Apple, Google, Amazon and Microsoft), with Coca-Cola completing the quintet. What is more surprising though is how these rankings have evolved since the start of the Century.

Wind the clock back to 2000 and Coca-Cola leads the rankings. Yes, Microsoft is there (still riding high on the success of Windows), but the other members of the top-five were IBM, Intel and Nokia. None of these three names features in the top-ten rankings for 2018. More interestingly, even a decade ago, when the iPhone was just one year old, Nokia was still in the top-five and Apple did not even appear in the top-ten. Back then, Google and Amazon weren’t there either. We had to wait until 2010 for Google to enter the top-five, and a further two years for Apple to reach this level. Meanwhile, Amazon joined only as recently as 2016.  

The question, therefore, to consider is why the platform companies have become so dominant in recent years. Our response is simple: it is a function of their ubiquity – in other words they are everywhere. Think about the presence of Amazon’s Alexa in your living room or Apple’s iPhone in your pocket. It is far more than this though. With Microsoft (or Facebook for that matter) you have multiple platforms: from Windows and Azure through to Xbox and LinkedIn (similarly, WhatsApp and Instagram as well as the main Facebook site). 

As all these businesses gain in scale and deepen their relationships with both consumers and businesses (do not forget the power of Amazon’s AWS, which is seven times bigger than Microsoft’s Azure), the opportunity cost of switching grows. The threat of regulation and the potential dismantling of these businesses cannot be ruled out over time, but for now, the platform seems dominant. 

Disclaimers

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