What Microsoft could do with its No. 3 brand

Given the beating Microsoft has taken lately, it's impressive that Microsoft still ranks third in Interbrand's "Best Global Brands 2009" report. Given Microsoft's still-robust brand, what should the company be doing to rejuvenate key areas of its business?

Only IBM (2nd) and Coca-Cola rank higher than Microsoft, and Google (7th) and Intel (9th) trail by a considerable margin. Apple, for all its sex appeal, barely scrapes into the top 20. Such resilience is all the more striking, given Microsoft's less-than-stellar year, as the report suggests:

2009 marks the first year-on-year decline in Microsoft's public history, despite a game console division that continues to be profitable. As the market matures, the giant faces stiff competition from faster, quicker rivals.

In terms of browsing, Microsoft's Internet Explorer has dropped 10 percentage points in market share every two years, while Mozilla Firefox gains 10 percentage points in the same time period. Additionally, a $300 million ad campaign featuring Jerry Seinfeld and Bill Gates could have fared better with audiences.

However, Microsoft's Bing, a new search engine that launched in June to great reviews, is poised to give Google a real run for its money.

The technology elite may have given up on Microsoft, but the general consumer public apparently has not. What can Microsoft do to further burnish its brand and improve its financial results?

1. Throw bling at Bing. Google dominates search to a degree reminiscent of Microsoft's dominance in software for personal computers. Bing, however, has rejuvenated Microsoft's search market share by taking a different, innovative slant on search. Microsoft failed at its me-too Live search competition with Google. It needs to continue to differentiate and innovate.
2. Ratchet up its investment in the Xbox. The Xbox makes Microsoft look cool to a class of consumer that is either too young or too cool to buy Microsoft's "desktop" software. The Xbox positions Microsoft as a leader in an industry that doesn't do much to strengthen its personal-computer or server businesses but does wonders for its cachet.
3. Accelerate its interaction with open-source companies and developers, and in more positive ways. Years ago, Microsoft made a show of working with SugarCRM and a few other open-source companies. Since that time, the only real "partnership" announcements out of Redmond relate to patent-licensing agreements. This is the wrong message to be sending, as it positions Microsoft as a predator, not as a partner.
   Open source need not be a threat to Microsoft, even if individual projects like Linux are. The company's blunt message needs more nuance, and whispering "peace" while yelling "war" (or even the inverse) is not adequate. Microsoft needs open-source communities working with it, not against it.

These are just a few ideas. I'd love to hear yours, particularly with regard to open source.

The reality is that Microsoft struggles to see beyond Linux, when it discusses open source, and this is a mistake, on its part. I have no problem with Microsoft's sanctification of intellectual property, but this insistence on intellectual property leads the company to throw out all sorts of benefits it could be deriving from open source.

Those benefits could include low-cost distribution, an expanded partner ecosystem, external developer review and contributions to its products, Microsoft technology as the center of the world's fastest-growing developer communities, and more.

Microsoft seems to have its game together on Bing and the Xbox, and it increasingly does better in open source. But it has a long way to go, and it needs to realize that the open-source question isn't about peace and love. It's about capitalism.

Open source can drive greater revenue for the company by making Windows much more appealing. There's no reason that Windows, rather than Linux, shouldn't be the default platform for open source--that is, no reason other than Microsoft itself.