Microsoft's brand power has been in sharp decline over the past four years, an indication the company is losing credibility and mindshare with U.S. business users, according to a recent study by market research firm CoreBrand.

According to the CoreBrand Power 100 2007 study (pdf), which polled about 12,000 U.S. business decision-makers, Microsoft dropped from number 12 in the ranking of the most powerful U.S. company brands in 2004 to number 59 last year. In 1996, the company ranked number 1 in brand power among 1,200 top companies in about 50 industries, said James Gregory, CEO of CoreBrand.

Gregory said that a decline in and of itself is not indicative that a company is losing its mindshare or reputation among customers. However, what's significant in Microsoft's case is that the decline has been consistent over a number of years, and has plunged dramatically in a brief time.

"When you see something decline with increasing velocity, it's a concern," he said.

Gregory could only speculate as to why Microsoft's reputation has been declining, since his firm does not ask people that specific question. He said the "underwhelming" response to Windows Vista might be one reason, and Apple's clever "I'm a Mac, I'm a PC" advertising campaign -- which paints Windows in an unfavorable light -- may be another.

IBM suffered a "much faster and more severe" decline in brand power in the early 1990s, Gregory said, and it took them 10 years to rebuild the brand's reputation. To stage a similar turnaround, Microsoft must have a clearer vision of the direction in which the company is headed and put forth leaders that people can trust to articulate that vision, he said.

Microsoft, which has been diversifying its business beyond packaged software in the past several years, has struggled to articulate how the many facets of its business -- software, entertainment and online among them -- show a cohesive business plan. The company has been trying to clarify at least one of those strategies -- its online advertising business -- with new services and a bid to purchase Yahoo. However, Gregory suggested it may take more than that to raise the perception of its brand.

Though the study was not directly related to video games, the Xbox 360 has slowed in recent months, being outsold by a dominant Nintendo Wii and surging Sony PlayStation 3 in that order.

I'm not surprised really, Vista was delayed many times and when released was a let-down. Hardware problems with the 36 are also well known, I imagine these things have contributed to that.

I guess with lots of companies their brand image peaks and falls off due to negative publicity, ineffective management promoting the company or questionable products being released to consumers.

Don't you just wish that the Xbox's green lights were red?

And when they get a "GROD" the lights would be green.

@NintendoMan

Me neither. I dont want to get into it from the xbox 360 field, but generally I've seen some of their employee's act completely strange.

One example would be Ballmer. The guy doesnt exactly make the best representation for Microsoft.

Tell an average person you have a Vista, and I bet you know what the reaction will be. It's not that bad for 360.

If you think XBox 360 was a problem for MS. Windows OS in the past and present have and still are a much bigger issue particularly the shonky OS that are Windows 98 and Windows Vista.

The only impact 360 likely had (given the business nature of the review) is the confusion around MS overall strategy when it got into consoles, etc.

I can tell you that in the company I work for (very large US based tech company and competitor of MS) our PR and Marketing folks love the whole diversion into entertainment as it makes MS an increasingly easy target from a business point of view - over diversification, loss of focus on core business, high chance of failure in new areas and the fact that MS has gone from being number 1 in a core business to a more shaky number 1 in that core and number 2, 3, 4 and below in other areas.

In entertainment their brand is probably actually a little better than it was - but only in comparison to themselves, they are still literally miles behind Apple, Sony and Nintendo brands (to name a few) in this area.

Yeah people with Vista at school keep getting told its crap, when the truth is all you need is a powerful computer..

Yeah and that costs more money to purchase a more powerful computer. To run Vista smoothly you need a minimum of 2GB of memory.