Alphabet, Amazon, Apple, Facebook, Microsoft: How Big Tech Companies Earn Revenue

Some of the biggest companies in the world at present are tech giants. They are worth billions of dollars, but have you ever wondered how exactly they earn their money?

The Big Five, a term used to describe the five biggest companies in the world of tech namely Amazon, Apple, Facebook, Microsoft and Google’s parent company Alphabet are collectively worth hundreds of billions of dollars, exceeding the value of the economies of countries as big as Saudi Arabia. Hence, learning how these companies got so rich is quite important.

Starting with Apple, this company made about 265 billion dollars in revenue last year. Almost 60 billion of their net income, with the rest going towards costs and expenses. iPhone sales account for just shy of 63% of all Apple revenue, with Mac sales falling shy of 10%, iPad sales coming in at a little over 7% and assorted other products coming in at 6.6%.

Another big earner for Apple, earning them about 37 billion dollars in revenue or 14% of the total, is the services that they provide including Apple TV, Apple Music and Apple TV. Over 40% of their revenue comes from North America.

Amazon depends even more on U.S. as Apple does, with over 69% of its total 232.9 billion dollars coming from this region. The UK, Germany and Japan come in at distant second, third and fourth places, with the entire rest of the world coming up to about 11% of Amazon’s overall revenue. Amazon earns a lot less profit than Apple as well. While their total revenue is comparable, only about 10 billion of it was net income.

Over half of this revenue came from the sale of products via, with third party services accounting for 18 percent and various other services providing the rest.

Alphabet’s revenue is about half that of Apple, coming in at 137 billion dollars. However, the percentage of their revenue being net income is similar to that of Apple, with the 30.7 billion dollars of income being thrice that of Amazon in spite of the far lower overall revenue.

Alphabet has a more global focus than either of the previous two companies, with 46% of revenue coming from the US and 33% coming from Europe. Over 70% of Alphabet’s revenue comes from Google properties including the search engine, YouTube and various others.

Microsoft, once the undisputed king of tech, earned $110.4 billion dollars last year. Half of this came from the US, and the other half from the rest of the world. 16.6 billion dollars were net income, which is still higher than Amazon. Microsoft also has a more diversified source of revenue, with equal parts coming in from Office and Azure, making up half, and the rest coming from various other products.

We are now left with Facebook, still a lightweight in the big five with less than 60 billion dollars in revenue, about as much as Apple earned in net income. Almost all of this revenue came from Facebook ads, with over 40% of profit coming from the US.

How the Tech Giants Make Their Billions - infographic
Infographic courtesy of: Visualcapitalist.

Featured photo: Doug Chayka / NYT

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