How the big five technology companies earn their money
Everybody knows them. Apple, Amazon, Facbook, Alphabet and Microsoft are the “big players” of the leading technology companies on the market. Together, they achieve a total turnover of around 800 billion dollars every year. However, as the following graphics from Visual Capitalist show, their revenue sources are surprisingly different.
All these companies have a similar history: they were founded or established on the fertile digital soil of the American West Coast – the Silicion Valley. Since June 2004, Facebook has also been based at the most important location of the IT and high-tech industry worldwide. But how exactly do these companies earn their money? Let’s take a look at the distribution of their turnover and use the following charts to see how these companies generate their revenues.
The graphic below shows very nicely that Apple’s leading sources of income are currently the iPhones. In 2018, these accounted for 62.8% of Apple’s total revenue. Apple services such as Apple Pay or Music generated significantly less revenue with around 14 percent, as did the Apple Mac (9.6%) or iPads (7.1%).
In the case of the retail giant Amazon, their online shops accounted for more than half of the income. However, with a 197% growth rate from 2017 to 2018, Visual Capitalist points out that selling through Amazon’s physical stores is one of the fastest growing sectors.
Amazon’s “Other” segment, which primarily includes the sale of advertisements, is also growing steadily, driving Amazon’s sales even higher.
Alphabet & Facebook
Alphabet, the parent company of Google, and social media pioneer Facebook are more similar. Both Alphabet and Facebook generate most of their revenue from ads that can be placed across their different product ranges. Advertising from various Google products, including YouTube and Google Ads, accounts for 70.4% of Google’s revenue. On Facebook, the figure is even 98.5%.
The international software and hardware manufacturer Microsoft probably has the most diversified sources of revenue among the “Big Five”. Microsoft generates the largest share of its revenue with its office and server products as well as its cloud services.
But also the search engine Bing represents a considerable source of income for Microsoft, among other products and services, as the graphic below from Visual Capitalist shows.
So while Apple, Amazon, Facbook, Alphabet and Microsoft may have many things in common, the way they generate their capital can be very different. The charts above give a very good insight into how each company generates its revenue.
Source Cover Image: iStock