How Tech Companies Earn Billions Surpassing Even the Economies of Whole Nations
Do a quick Google search of the top tech companies by market capitalization, and you will have Apple, Microsoft, Amazon, Alphabet (Google), and Facebook as the top. What do they have all in common? Well, all of them are tech companies. Delving deeper into this list of successful tech companies, you will see that the top four had breached the trillion-dollar mark. This means that Amazon, a company that started out of a garage, is now worth 36,000 times more than the economy of Tuvalu, the world’s most impoverished nation by nominal GDP and 4.5 times the economy of Singapore.
Looking at the financial books of these companies, you would see that they have different trajectories, but mainly toward more investments coming in. As they are the most profitable of all the companies, they are also subject to the most stringent government regulations and interventions. It would be interesting, though, how these companies have earned their billions over the year.
Exponential Growth Due to Revenues from Services
Credit goes to technological adoption as the key behind all these profits coming in. Amazon, for example, is setting last fiscal year’s sales as the set target and chances are, they will be able to beat the goal because many people are now using their services more often. In a world that has its movement restricted, delivering goods, door-to-door has also become a necessity. Not everything is successful, though. For example, Amazon’s physical stores, the fastest-growing segment of the company in the previous years, has been bleeding money lately. How about Alphabet, the company behind Google? The answer lies in ad revenues. Just recently, Google’s ad revenues increased to $20 billion. This can also be attributed to the growth of influences users of various Google services such as YouTube to promote their brands. With more influencers on the market, there are more spots of revenue-generating ad spots.
For Microsoft, it was cloud computing that contributed to the income pie. Azure has brought in the most significant revenue so far, with many people now choosing Azure over the more traditional Windows or Office. Guess who owns Azure? Microsoft, of course. Microsoft has been engaged in a great degree of acquisitions and mergers to ensure revenue and optimal service for its consumers.
A few legislators asked Mark Zuckerberg how Facebook was making money because users do not make a payment to use the services like Spotify or Netflix. Zuckerberg gave credit to ad placements as Facebook’s primary source of revenue. Those thinking that ads might not generate that much money would be surprised to know that that segment added $20 billion to Facebook’s total revenue in the last years.
What happened to Apple? While the other four have shown exponential growth in revenues, the same has not happened yet to Apple in the last few years. iPad sales and the latest versions of the iPhones had been propping up the company, as well as the ever-climbing common stock value traded on the stock exchange. So while sales might not be that ideal, there are still other avenues of income for the company. Apple’s common stocks are actually inspiring people to make investments in tech stocks, which is good for the economy.
Tech Companies Richer Than Whole Nations
When you look at the combined revenue numbers of the top five tech companies, you will see that the numbers are better than many countries. If the five companies were considered as one country, it would rank just above Switzerland and below Saudi Arabia.
As technology becomes a mainstay and more people adopt the use of devices, the revenue is only expected to rise unless another disruptor causes the world to shift its paradigms. Remember that success is not confined to these big companies. Even those who are just starting can also be profitable. After all, many of the companies that are dominating the world now started as small companies, managed by people who had excellent money management skills. All it takes is a grand idea, a plan of execution and the best people to run the company.