It was recently announced that Apple, assessed at $150 bil­lion, sur­passed Google as the world’s most valu­able brand. This comes a year after over­taking Microsoft as the globe’s most valu­able tech­nology com­pany. The day after the announce­ment, Microsoft made its biggest pur­chase to date, buying Skype for $8.5 bil­lion. Here, Andrew Rohm, asso­ciate pro­fessor of mar­keting at North­eastern Uni­ver­sity, assesses the branding and mar­keting strate­gies employed by these goliath com­pa­nies and whether Microsoft’s new pur­chase was in direct response to Apple’s success.

Did Microsoft pur­chase Skype in response to Apple’s dom­i­nance? Will Microsoft con­tinue to pur­chase other estab­lished companies?

Microsoft pur­chased Skype to better posi­tion itself to com­pete with leading tech­nology brands such as Apple and Google. Skype has helped to pio­neer Internet-​​enabled phone calls and has approx­i­mately 170 mil­lion users per month. With the pur­chase, Microsoft gains sig­nif­i­cant scope in the emerging field of Internet com­mu­ni­ca­tions, a field in which Google already com­petes with its search capa­bil­i­ties as well as its own com­peting suite of ser­vices sim­ilar to Skype’s.

In addi­tion, Apple’s Mac v. PC com­mer­cials of a couple of years ago posi­tioned Microsoft pub­licly as an un-​​cool, un-​​hip tech­nology lag­gard. So, yes, the Skype deal is absolutely in response to Microsoft’s efforts to shift its brand image and become a major player in the fastest growing area of person-​​to-​​person and business-​​to-​​business com­mu­ni­ca­tions, including Internet video com­mu­ni­ca­tions and con­fer­encing.
Experts note that the $8.5 bil­lion that Microsoft has agreed to pay for Skype is a lot to pay for a com­pany with only $860 mil­lion in rev­enues and that actu­ally lost money in 2010.

How do the mar­keting strate­gies for trend­set­ting com­pa­nies like Apple or Google differ from a PC-​​based com­pany like Microsoft? How will adding a video-​​chat ser­vice, such as Skype, bol­ster Microsoft’s brand?

Apple is a trend­setter, first because of its rad­ical product inno­va­tions. Its mar­keting is bril­liant because it’s closely aligned with its product design: through sim­plicity and focus on con­sumer ben­e­fits more than the fea­tures of the product. This applies to its Apple retail stores as well as its tele­vi­sion com­mer­cials. On the other hand, Microsoft is per­ceived as a monop­o­listic com­pany whose brand has suf­fered with past mis­cues such as its less-​​than-​​helpful paper­clip thingy and its Vista oper­ating system. The addi­tion of Skype can boost the Microsoft brand if it is able to suc­cess­fully inte­grate the ben­e­fits that Skype cur­rently offers indi­vid­uals and busi­nesses into its existing and future home and busi­ness prod­ucts. For example, one way that Skype can make Microsoft “sexy” again would be to inte­grate Skype’s voice and video mes­saging plat­forms with Microsoft’s e-​​mail, Xbox Kinect and mobile plat­forms. This could result in a pretty cool in-​​home gaming and video com­mu­ni­ca­tions system.

What strate­gies can Microsoft employ to com­pete with these inno­v­a­tive companies?

The best inno­va­tion com­pa­nies and brands build from within and are able to stay ahead of what con­sumers are looking for with their product devel­op­ment. Some call this the “wow” factor and it cer­tainly applies to what Apple, Google and Skype have achieved. Microsoft has sev­eral strengths, namely its Office suite of prod­ucts and its Xbox fran­chise, and inte­grating Skype into these existing prod­ucts could sub­stan­tially help the com­pany com­pete in the Internet com­mu­ni­ca­tions arena. Per­haps more impor­tantly, for Microsoft to be com­pet­i­tive in the near future, it needs to somehow leverage Skype with its lag­ging mobile com­mu­ni­ca­tions and data plat­forms. There lies the future of con­sumer and busi­ness communications.