Apple 2.0

Covering the business that Steve Jobs built

How Apple became the world's most valuable brand

October 2, 2013: 11:26 AM ET

By Interbrands' formula, Apple's brand value has increased nine fold since the iPhone.

FORTUNE -- It wasn't so much that Coca-Cola lost its cachet. It was that the world changed, and Apple found itself ahead of the curve.

That's the conclusion Interbrand came to when it applied the formula it's been using since 2000 to come up with its annual Best Global Brands list and found Apple (AAPL) had ousted long-time No. 1 Coca-Cola (KO) as the world's most valuable brand.

"In just a few years, all the rules of the marketing game have changed," Interbrand CEO Jez Frampton wrote in Monday's report. "Leadership roles are converging, traditional structures are crumbling, and the consumers' voice carries more weight than ever. Less tangible strengths like emotional intelligence and psychological insight are proving to be just as vital to leading a brand today as the ability to generate high ROIs and increased shareholder value.

"Every so often, a company changes our lives—not just with its products, but with its ethos... Apple has set a high bar for aesthetics, simplicity, and ease of use that all other brands are now expected to match. Apple's ability to 'think different' and deeply consider the customer experience is what makes the brand a leader—one that has inspired a loyal following and has the whole world anticipating its next big move. Brands, as Apple exemplifies so well, are business strategy brought to life."

It also helped Apple that Interbrand's three-part brand-value formula places a lot of weight on the company's financials -- specifically "the after-tax operating profit of the brand, minus a charge for the capital used to generate the brand's revenues and margins."

Operating profit is something Apple has in spades.

The two other criteria are a little squishier.

RBI, or Role of Brand Index, is a measure from 0 to 100 of how much of that operating profit (in the eyes of an expert panel) can be attributed to the brand.

Brand Strength, is also measured on a 0 to 100 scale. It's defined as the "ability of the brand to create loyalty and, therefore, to keep generating demand and profit into the future." Interbrand's Brand Strength formula is secret, but it's not hard to see how Apple might score well on "generating demand into the future."

NOTE: The graphic above was created using Pixxa's Perspective app on the iPad and exported (with the developer's help) as a movie for YouTube. The data for 100 companies per year going back to 2000 are available at Interbrand, but not, unfortunately, as a single exportable spreadsheet.

If you're feeling energetic, I invite you to improve on my modest effort.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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