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Who do you love?
Cisco, Dell and Microsoft earn raves in a customer loyalty survey. Apple, HP and Sun? Not so much.
September 20, 2004: 1:34 PM EDT
By Paul R. La Monica, CNN/Money senior writer

NEW YORK (CNN/Money) - Executives at Cisco, Dell, Microsoft and IBM don't need to worry about losing a lot of corporate business any time soon -- at least according to a new report about customer loyalty in the tech sector.

But that might not be the case for managers at Apple, Hewlett-Packard, Intel, and Sun Microsystems.

Walker Information, a research firm, conducted a survey of information technology (IT) decision makers to find which companies customers were most loyal to.

The study found that tech companies earning the highest marks for loyalty tended to be more profitable and enjoyed greater stock price gains during the past five years than those with poorer customer opinions.

The research firm asked respondents to answer questions about 51 leading brands from 39 companies in five tech subsectors: software; IT services; networking equipment; servers and workstations; and storage systems.

Companies were then grouped into three categories: loyalty leaders, loyalty limbo and loyalty laggards.

Walker would not identify the companies that were laggards. Instead it simply provided a list of leaders and those that were not ranked in that category.

Taking care of business
Techs cited as loyalty leaders have outperformed peers over the long haul.
Company10 yr. price change10-yr EPS Gr. Rate
Dell 6903%33%
Cisco Systems1321%21%
Microsoft650%27%
IBM403%10%
Intel389%4%
Sun Microsystems371%-9%
Hewlett-Packard108%-1%
Apple Computer101%2%
Sources:Thomson/Baseline, Walker Information

In addition to Cisco, Dell, Microsoft and IBM, storage companies EMC and Network Appliance as well as software giants Oracle and SAP were named loyalty leaders.

Not making the cut as leaders among high-profile companies were networking equipment makers Lucent and Nortel, and software firms Adobe and Computer Associates.

Overall, Walker found that 84 percent of the survey respondents were satisfied with their IT vendors but that only 44 percent of them were truly loyal to them. So many tech firms could be at risk of losing customers.

What's more, the results indicated that clients were usually willing to pay more for the products and services of companies they were loyal to, rather than switch to less costly competitors.

The survey had several noteworthy findings about specific companies.

Businesses not taking a bite out of Apple.

The fact that Apple was not named a leader may seem surprising considering how fanatical many Mac devotees are.

But the survey only measured loyalty among corporate information technology decision makers, not average consumers. "IT departments appreciate Microsoft more than individual users," said Phillip Bounsall, executive vice president for Walker Information.

Security opportunity for Microsoft?

Should Symantec and McAfee investors be more worried about Microsoft?  
Should Symantec and McAfee investors be more worried about Microsoft?

The two leading makers of anti-virus software, McAfee and Symantec, did not rank as loyalty leaders. But Microsoft's high ranking could mean that it will be able to quickly gain market share if it were to roll out its own Web security products.

That's a potential cause for concern for investors in McAfee and Symantec, especially because shares of both have rallied this year.

Big software Blues.

While IBM scored well in four of the five product categories, it was not named a loyalty leader in software, a high profit margin business that IBM has been emphasizing in recent years.

Although software accounted for just 17 percent of IBM's total second quarter sales, the business contributed a third of Big Blue's pre-tax operating profits.

Batting .200.

Even though HP failed to rank as a leader in software, networking equipment, servers and storage, there was one promising sign. It was named a leader IT services while services competitors Accenture and EDS were not.

HP is a relative newcomer to the services business but it is rapidly trying to make a bigger push into this lucrative tech segment. Consulting tends to be a more steady business since customers typically sign long-term contracts, which leads to recurring revenue streams.

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Another blow to PeopleSoft?

PeopleSoft, which is fighting off a hostile takeover attempt from rival Oracle, did not rank as a loyalty leader while Oracle did. That may not bode well for PeopleSoft, especially since it was named a leader in a similar survey Walker did in 2002.

However, another recent survey doesn't paint as rosy a picture for Oracle. Research firm Techtel issued a report indicating that customer opinion of Oracle hit a 12-year low. Bill Schaub, vice president of Techtel, said that customers tend to have lower opinions of software firms than other types of tech vendors but that Oracle stood out.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.