Who are these five world-famous technology giants, and what do they do for money? Experts
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Combined revenue of the five tech giants, 2017-2020
These companies are not affiliated with each other, moreMoreover, in some markets they are competitors. They are united only by the fact that the products of each are known all over the world, each of these companies is iconic in its own way and was able to provide at least one major technological breakthrough that once changed the world and continues to change it.
For 2020, the Big Five giants,each producing its own products or services and partly competing with each other, they earned a total of over 1 trillion dollars. Their total revenue increased by 18.6%, while due to the coronavirus pandemic, global GDP was declining, many companies were on the verge of bankruptcy, left the markets or were forced to sell at a low price to more successful competitors.
The total revenue of the FAAMG five companiesexceeds the GDP of Saudi Arabia or Turkey and is comparable to the GDP of countries such as the Netherlands or Indonesia. And this indicates a huge demand in the world for the products and services of FAAMG companies, as well as the fact that the latest technologies and products developed by them allow each user of these products to reduce the costs of a pandemic and lockdowns, for example, by communicating with friends via social networks on a smartphone or ordering products and other goods in the online store.
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Top 5 technology giants: comparison by growth rates and profitability, 2020, %
Of course, these companies have competitors andanalogues, and not necessarily on a global scale, but it was these companies that were once able to make technological breakthroughs, the first to prove to the whole world that earning billions of dollars does not have to be offline.
What services and products are the sourceincome for the world's tech giants? The multinational corporations that make up the FAAMG “group” make money in a much larger number of markets than many users of their products have previously imagined.
For example, Facebook and Alphabet (brand ownerGoogle) earn mainly on the sale of advertising, this is the main item of their revenue. The share of advertising sales in Facebook's revenue at the end of 2020 was 98%, being the main income of the corporation, and not much less in Alphabet's revenue (87%). At the end of 2020, no matter how crisis it was for the whole world, Facebook earned $85.97 billion in revenue, increasing it by 22% compared to the pre-crisis 2019. In turn, Alphabet in 2020 received revenue in the amount of $182.53 billion, having increased it by 12.8% over the year. Note that over the past four years, Facebook's average annual revenue growth rate was 21%, and Alphabet's revenue was 13%.
Apple receives 80% of its revenue in realsector - that is, from the production of products. Half of her income comes from iPhone sales; approximately another 30% of its revenue comes from sales of Mac, iPad and other devices, as well as accessories. Another 20% of the corporation’s income is generated by services: Apple Pay, Apple TV, Apple Music and cloud services. Although the crisis year of 2020 was not the most successful for the corporation in terms of revenue growth (its revenue for the year increased by only 5.5%), it still retains second place in the FAAMG “group” in terms of revenue. For 2020, Apple's revenue was $274.51 billion, and the average revenue growth rate over the last four years was 5%.
Microsoft Corporation receives its billionsincome both in the "real" sector and in the "virtual" one. So, sales of software - the Windows operating system and MS-Office applications bring corporations 32% of revenue. Another important component of Microsoft's revenue is cloud services, that is, the Azure data storage and processing service. It accounts for 34% of the total revenue of the transnational corporation, and it earns the same amount from other services (online games, social networks, instant messengers, etc.). At the end of 2020, Microsoft's revenue grew by 13.6%, increasing to $143.02 billion. Microsoft's average revenue growth rate per year was 10% over the past 4 years.
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Another tech giant Amazon, the largesttechnology corporation in the world in terms of revenue, receives the largest income in the retail trade of a wide variety of goods, both online and offline stores. Sales through the online store Online Store provide corporations with a little more than half of all revenue (53%). Another 22% is brought by intermediary services (delivery service, commission). Cloud storage and data processing service AWS provided corporations with 10% of total revenue. Offline stores and streaming service Amazon Prime brought corporations, respectively, 3% and 6% of total revenue. In 2020, Amazon Corporation increased its total revenue by 35.4%, while on average over 4 years its revenue grew by only 21% per year.
As you can see, the business of most technologicalThe giants are quite well diversified, although there are exceptions (for example, Facebook). Diversification, including the development of data storage and processing technology, is an increasing share of the revenue of transnational corporations. It is likely that the share of this growing segment in the total revenue of companies in 5 years may increase up to a third of revenue.