Tech Giants: An Overview and Their Growth During the Pandemic

Business
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Written by Julia Siiatski

We are currently living in the age of tech giants, as evident when comparing companies with the largest market capitalizations in 2005 and 2020. ExxonMobil, the well-known natural gas company, and General Electric, a multinational conglomerate, were two companies with the largest market capitalizations in 2005. Other companies also holding this position included Microsoft, Citigroup, BP, Walmart, Royal Dutch Shell, and Johnson & Johnson. As you may have noticed, in 2005 the top companies were diverse, ranging from finance and tech to health and physical distribution. Over the following 15 years, however, tech giants began to irreversibly dominate the market with only Microsoft maintaining its status as having one of the world’s largest market capitalizations, showing growth from 263 billion US dollars in 2005 to 1,624 billion US dollars in 2020. 

In this article, I will focus on the big five tech giants (or also known as the Big 5) that are located in the United States: Google, Amazon, Facebook, Apple, and Microsoft. These companies have great influence in many sectors, but their influence is especially evident when looking at the digital services sector. This is clear when observing the diagram below featuring a statistic from 2019 which highlights the most frequently used social media and messaging services in the United States in which all the aforementioned services are owned by the Big 5, with the exception of Twitter and Snapchat. 

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Google & Apple

Moving along, I’d like to focus on each tech giant’s strengths, particularly in the United States, starting with Google and Apple. To begin, Google dominated in cloud storage solutions, smartphone operating systems, and the virtual assistant market in 2019. Google Drive was the most used cloud storage solution, with 30% of users reporting its use, and Apple’s iCloud closely followed as the next most popular cloud storage solution, having a quarter of Apple users reporting its use. Google also dominated in the smartphone operating systems duopoly with 84.1% of global smartphone shipments being Android devices. In comparison, Apple once again split the limelight and accounted for the remaining 15.9% of shipments in 2020. This starkly contrasts the companies’ market shares in 2010 - the division of which could be observed in the diagram below, with Android and iOS systems making up less than 40% of the market share. 

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Google also exhibits strength in the virtual assistant market, with consumers holding a slight preference for Google Assistant in comparison to Siri and Alexa. Considering there is only a slight difference among the number of users who prefer Google Assistant, Siri, and Alexa, the dominant virtual assistant device could easily change in upcoming months.  


Considering Apple’s significant magnitude evident through having the largest market capitalization in 2020 at 2,023 billion out of all of the tech giants, we will now also cover Apple’s performance in the last year. Apple, similar to other tech giants operates many different product sectors, including the iPhone, Mac, iPad, Wearables, home and accessories and services. When observing each sector, Apple’s market share is immense, especially evident through having over 50% of the market share in the wearables segment worldwide in the first quarter of 2019 and 2020. Apple also holds over 30% of the market share in the tablet sector, with only Samsung trailing behind in market share at 18.1% in the fourth quarter of 2020. Thus, even in the product categories outside of Apple’s main revenue stream - the main revenue stream consistently being the iPhone - the company continues to succeed in maintaining significant market share. 


Microsoft

Microsoft continues to dominate in 2021, holding 47.5% of market share in the office productivity software sector worldwide, closely followed by Google Apps, which holds 44.56% of market share. Microsoft also rivals Amazon with its software Azure being one of the most adopted public cloud platforms. Nonetheless, Amazon’s AWS is still the most adopted by consumers for public cloud usage. 

Amazon

Amazon is known to many as a convenient e-commerce platform; however, Amazon’s strength lies in not being a one trick pony as is shown through the various streams of revenue the store has illustrated in the diagram below. Amazon’s products and services include updated Echo speakers and the introduction of Luna, a cloud gaming service and game controller. Moreover, although 51% of Amazon’s total sales still originate from their online store, the other 49% now consists of third-party seller services, such as Amazon Web Services and physical stores. 

As briefly touched upon previously, Amazon also is a leader in the 150 billion dollar cloud market. Amazon Web Services was the most widely adopted public cloud platform with 79% of enterprise respondents indicating their adoption of the software.  

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Facebook

Highlighting the strength of Facebook, both the apps Facebook and Facebook Messenger were the most used social media and messaging services in 2019 in the United States. To elaborate, 68% and 47 % of those surveyed had a Facebook and Facebook Messenger account, respectively. 


Now that we have a better understanding of the individual tech giants and their positions in different markets, a current question that arises is: how has the pandemic influenced tech giants?

During the pandemic, the Big 5 have seen significant profits, with combined revenues of over 1 trillion dollars. Although there was uncertainty surrounding their future a year ago, consumers and businesses were willing to buy products to aid in making working from home more convenient.


As school and work transitioned into virtual settings, families increasingly bought iPads and Macs. Moreover, almost a quarter of Americans stated that they more heavily use e-commerce, which likely included significant purchases from Amazon, with its net sales (in millions) jumping from $86,164 in 2019 to $118,605 and $127,024 in 2020 and 2021. In addition, although businesses cut back on other purchases, they continued to buy Microsoft and Amazon software. 


These tech companies were also able to lower their costs through saving on expenses for travel, marketing, and entertainment. This could be observed in Google’s description of its savings, where with employees working from home and the company spending less on promotions and entertainment, a whopping $1 billion was saved by the company on an annualized basis. 


Companies even increased spending to support the growing demand for their own products and services during the pandemic. This could be observed through Amazon spending $50 billion in the last year on warehouses and cloud computing hubs to support operations facing increased demand.  


To conclude, at the beginning of the pandemic, the Big 5 faced some uncertainty regarding their profitability. However, as a result of consumers and employers considering the tech giants’ products and services as essentials when working from home, the companies were able to further grow and expand. Considering the big 5 tech giants’ significant increase in net income during the pandemic - all having positive growth above 40% in the second quarter of 2021 when compared to the second quarter of 2020 - I believe the industry is strong and will only continue to introduce products that consumers will readily adopt in their daily routines. 

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