How The Big 5 Tech Companies Make Their Billions

How The Big 5 Tech Companies Make Their Billions

Big 5 Tech Companies
Photo by Christian Wiediger on Unsplash

Ever wonder just how the tech giants make their billions? Amazon, Apple, Facebook, Microsoft, and Alphabet have become some of the most valuable publicly-traded companies globally. And they all have a lot in common: They were each founded or incubated on the West Coast; they are consumer focused; and each has faced controversy for its handling of user data.

And they definitely are making money. Apple had revenue of $265.6 billion in 2018, Amazon racked in $232.9 billion that year; Alphabet Inc. (Google) reported $136.8 billion; Microsoft, $110.4 billion; Facebook, $55.8 billion.

Combined, the Big Five Tech Companies had revenue of more than $800 billion of revenue in 2018.

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Here’s how they make money:

The iPhone accounted for 62.8 percent of Apple’s bottom line. The iPad and Mac account for 7.1 percent and 9.6 percent of revenues, respectively

“All other products and services – including Apple TV, Apple Watch, Beats products, Apple Pay, AppleCare, etc. – combine to just 20.6 percent of revenues,” Visual Capitalist reported.

At Amazon, the company makes most of its money from its online stores (52.8 percent). Third-party seller services account for 18.4 percent of the revenue. But the company’s fastest-growing segment is offline sales in brick-and-mortar stores, which generate $17.2 billion in current revenue, a 197 percent increase year-over-year.

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Amazon Web Services (AWS) counts for 11.0 percent of revenue, while its ad sales are also increasing.

Microsoft has the most diversified revenue. The company has eight segments that generate 5 percent or more of revenue. The biggest three are “Office products and cloud services” (25.7 percent), “Server products and cloud services” (23.7 percent), and Windows (17.7 percent),” Visual Capitalist reported.

Over at Alphabet ad revenue (via Google, YouTube, Google Maps, Google Ads, etc.) is still king, accounting for 85 percent of the firm’s revenue. Google products and services, including Google Play and the Google Pixel phone, generate 14.5 percent of the revenue.

Ads amass a whopping 98.5 percent of Facebook’s revenue. “Meanwhile, 1.5 percent 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,” Visual Capitalist reported.