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How the Tech Giants Make Their Billions

Do you ask yourself how the tech giants make billions? Firstly, you should know the five of the Big Tech companies  (Amazon, Apple, Facebook, Microsoft, and Alphabet) which have emerged as some of the most valuable publicly-traded companies in the world. Then, we will discuss in this article these companies in details.

These tech giants also have a consumer-facing aspect of their business that is front and centre. With billions of people using their platforms globally, these companies leverage user data to tighten their grip even more on market share.

Tech Giants

Apple

It is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. Revenue in 2018: $265.6 billion. 

  • Apple generates a staggering 62.8% of its revenue from the iPhone.
  • The iPad and Mac are good for 7.1% and 9.6% of revenues, respectively.
  • All other products and services including Apple TV, Apple Watch, Beats products, Apple Pay, AppleCare, etc. combine to just 20.6% of revenues.

Amazon 

It is an American multinational technology company based in Seattle, Washington that focuses on e-commerce, cloud computing, and artificial intelligence. Amazon is the largest e-commerce marketplace and cloud computing platform in the world as measured by revenue and market capitalization. Revenue in 2018: $232.9 billion.

  • Amazon gets the most from its online stores (52.8%) as well as third-party seller services (18.4%).
  • Amazon’s fastest-growing segment is offline sales in physical stores.
  • Offline sales generated $17.2 billion in current revenue, growing 197% year-over-year.
  • Amazon Web Services (AWS) is well-known for being Amazon’s most profitable segment, and it counts for 11.0% of revenue.
  • Amazon’s “Other” segment is also rising fast . it mainly includes ad sales.

Microsoft 

It is an American multinational technology company. It develops, manufactures, licenses supports and sells computer software, consumer electronics, personal computers, and related services. Revenue in 2018: $110.4 billion.

  • Microsoft has the most diversified revenue of any of the tech giants.
  • This is part of the reason it currently has the largest market capitalization ($901 billion) of the Big Five.
  • Microsoft has eight different segments that generate ~5% or more of revenue.
  • The biggest three are “Office products and cloud services” (25.7%), “Server products and cloud services” (23.7%), and Windows (17.7%).

Alphabet

It is an American multinational conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries. Revenue in 2018: $136.8 billion.

  • Despite having a wider umbrella name, ad revenue (via Google, YouTube, Google Maps, Google Ads, etc.) still drives 85% of revenue for the company.
  • Other Google products and services, like Google Play or the Google Pixel phone, help to generate 14.5% of total revenue.
  • Other Bets count to 0.4% of revenue. these are Alphabet’s moonshot attempts to find the “next Google” for its shareholders.

Facebook 

It is an American online social media and social networking service company. It is based in Menlo Park, California. Revenue in 2018: $55.8 billion.

  • Facebook generates almost all revenue (98.5%) from ads.
  • Meanwhile, 1.5% comes from payments and other fees.
  • Despite Facebook being a free service for users, the company generated more revenue per user than Netflix, which charges for its service.
  • In 2018 Q4, for example, Facebook made $35 per user. Netflix made $30.