Intel Inside - Should Apple Use It?

Discussion in 'General Mac Discussion' started by rdowns, Jun 13, 2005.

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  1. rdowns macrumors Penryn


    Jul 11, 2003

    NEW YORK - What happens when two of the world's most powerful brands come together?

    One of the more interesting side stories to the alliance between Apple Computer (nasdaq: AAPL - news - people ) and Intel (nasdaq: INTC - news - people ) is whose brand, if either, will get a boost from the forthcoming Intel-based Mac.

    How will Apple, which fiercely guards and controls its brand identity, deal with Intel Inside? Will consumers see Intel stickers on their Macs, or hear the familiar four-tone Intel melody in television ads for Macs? (The Intel Inside program reimburses PC makers the cost of advertising and marketing if they co-market Intel's brand alongside its own. Last year, Intel spent $2.1 billion or about 6% of sales on advertising, which includes the cost of "Intel Inside.")

    Will Apple shoot itself in the foot if it doesn't participate in Intel Inside? After all, PC makers such as Dell (nasdaq: DELL - news - people ) and Hewlett-Packard (nyse: HPQ - news - people ), with which Apple is trying to stay price competitive, save tens of millions of dollars in marketing costs by agreeing to co-market Intel's brand alongside their own.

    "The only one really taking a brand risk here is Apple," says Jonathan Chajet, director of brand strategy at Siegel and Gale, a brand consulting firm. "Customers love Apple because it has always been the anti-PC, and Intel is anything but anti-PC."

    "Apple wouldn't just slap an Intel Inside stamp on its computers the way other manufacturers do," says Jeffrey Parkhurst, managing director at the New York branding consultancy Vivaldi Partners, which worked with Forbes recently on a survey of brand values.

    "There are some great opportunities for them to do some co-branding, but they'd have to do it in a classy way."

    According to Vivaldi, Apple ranked first in brand value. Another survey, by Interbrand, ranked Intel number five in global brand power.

    Intel and Apple "have two of the best known brands in the world," says Dean McCarron of Mercury Research. "Combining two powerful brands doesn't make sense."

    The question is whether either brand gets diluted in the process. Apple will no doubt be temped to take advantage of Intel's millions, but will have to reconcile that with the strong, direct connection it wants to maintain with its customers.

    "I think Apple would be crazy not to take advantage of Intel Inside," says Nathan Brookwood, head of chip-research firm Insight64 based in Saratoga, Calif. "Why not?"

    One reason: Steve Jobs. Apple's chief executive has always kept a steely grip on advertising, going back to the company's early days. He decided that the stylized bitten-apple logo should have stripes and was even involved in choosing the typeface on early print ads.

    "These two companies are control freaks at their core," says Kevin Krewell, analyst with Instat/MDR, a research firm in San Jose, Calif. "Intel wants to control the whole chain down to the consumer, and Apple does too. Apple is jealous in guarding its branding."

    Intel may gain more brand equity and sex appeal from its deal with Apple than the other way around.

    "A relationship with Apple leads to the iPod, even if Intel doesn't have chip in the iPod, and through Steve Jobs, it leads to Pixar," says Parkhurst. "These associations can only help Intel."

    Apple may not get a boost to its brand equity unless an Intel chip figures prominently in a very hot product, such as a thin, light, powerful notebook that Apple so desperately wants to build.

    Or they may not do it at all, Chajet says. "I don't think Apple needs all that much help selling its PCs."
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