The largest technology businesses generate revenues in different ways, but all rely on a dedicated customer-user base.
These ‘big five’ technology businesses all rely on IP rights, but, in general, patents are playing a less central role in their success. Depending on the the industry they operate in and the products they sell, their strong brand recognition, market share and access to capital provide most of the leverage they need to maintain a proprietary position.
These businesses tend to use their patents for defensive purposes – to dissuade competitors or slow them. Potential disruptors to their business model who have patents are handled differently. As a general rule, leading tech companies will not in-license unless they are forced to legally. They have the cash and will to carry on an long court battles and multiple appeals.
For Apple, iPhones are 62.8% of revenue, 14% services (like Apple Music) and less than 10% from Macs.
Less than half of Apple’s revenue is derived from the Americas; 35% from Asia.
For Amazon, online stores comprise 52.8%, web services 11% and third-party sellers (includes shipping fees), 18.4%.
69% of Amazon revenue comes from the U.S.
Alphabet generates 70.4% of its revenue from advertising (YouTube, Maps, Gmail, etc.), 14.6% from Google Network Members (ads).
33% of Google revenue comes from Europe; less than half from the U.S.
Microsoft is the best balanced – hence its recent success on Wall Street: Office, Azure, Windows, LinkedIn, Devices, Search and Gaming are the mainstays.
Talk about balance: 51% of MS revenue is from the U.S. 49% from the rest of the world. Cloud services comprise almost of quarter of MS revenue.
For Facebook, ads comprise 98.5% of its revenue.
Only 43% of FB revenue is from the U.S. Facebook is the most profitable company of the group, and one of the most profitable in the world, with 39.6% margins. Amazon, in contrast, is 4.3%.
|$55.8 billion (2018 Revenue)||$22.1 billion (Income)||39.6% (Margin)|
For a detailed breakdown of FAANG revenues read “How the Tech Giants Make Their Billions” in Visual Capitalist. VC deconstructs, visually, the revenue streams, big and small.
Image source: visualcapitalist.com