Looking back at the market cap of some of the largest companies in the World in the past 20 years, one can see how the underlying macroeconomic theme has evolved. This theme is driven by investor sentiment, structural market forces & unforeseen financial events. The data suggests that while some industries have risen to prominence, others have faded in importance. At the same time, there have been some inspiriting individual success stories like Big Tech companies – Apple, Microsoft, Google, Amazon & Facebook.
Looking at the top brands in the world, the lion’s share is occupied by the Big techs as evident from the infographic above. Before talking more about the tech giants let’s take a look back how has the global spectrum top companies evolved over the past two decades.
Dotcom Bubble (1999) – Microsoft, the original software monopoly in the tech business became the biggest company at the peak of the dot come bubble in Dec. 1999 with a market cap of $531 billion ($931 billion in today’s terms). Albeit, this was a temporary glory for the tech companies in the Top 10 which also included Intel ($271 billion), Lucent Technologies ($252 billion) & Nokia ($197 billion).
Post Bubble (2004) – The dot com bubble burst broke the dominance of the tech companies in the Top 10 list with Microsoft falling to second place with a market cap of $282 billion – the only other tech company represented in the list was Intel at number 9 with a market cap of $184 billion.
Financial Crisis (2009) – As the U.S companies slid after the financial crisis of 2009, Microsoft was the only tech company left in the Top 10 with a total market cap of $212 billion, dropping down to the 4th position.
Oil Boom (2014) – The commodity boom led by a $100 barrel of Oil also saw the resurgence of the tech boom led by Apple, whose flagship smartphone iPhone launched in 2007 became a household name. The innovation also took the company to the top spot of the most valuable companies’ list with a total market cap of $560 billion followed by Google at number 3 with $358 billion & Microsoft at number 4 with $344 billion market cap.
Big Tech Era (2019) – Fast forward to today and the Top 10 companies’ list is dominated by the Tech players – First five spots are grabbed by Big techs Microsoft (1050 billion*), Amazon ($956 billion*), Apple ($939 billion*), Alphabet ($786 billion*) & Facebook ($560 billion*) in that order, with Chinese techs of Alibaba ($451 billion*) & Tencent ($431 billion*) landing at the 7th & 8th spot respectively.
Three companies namely Apple, Amazon & Microsoft have already joined the prestigious $1 trillion market valuation club. Apple was the first one to cross the line in Aug. 2018, followed by Amazon in September of the same year & Microsoft joining the duo in April of this year. While Apple & Amazon have receded below the $1 trillion market cap recently, Microsoft is holding on to the distinction as we speak. Nevertheless, strong growth helped along by diversified business models are fueling sales for the Big techs (infographic above).
While Microsoft has held the fort for the technology companies over the years, Apple has a unique distinction of being a company on the verge of bankruptcy in the 1990s turning around to become the most precious brand in the World. The tech giants however, don’t seem to be happy sitting on their laurels as the innovation & increased competition from other players in the tech arena have pushed them to diversify beyond their niche markets.
- Microsoft has aggressively grown out of its niche of software services (Windows, MS Office) to expand in to Azure Cloud business, LinkedIn acquisition & Gaming platforms.
- Apple is seeking to expand its services side portfolio (Apple Pay, Apple Music & Apple TV) to help offset the stagnating growth in hardware sales, especially in iPhones. There are also reports of a secret autonomous car project that Apple is working on.
- The Internet search giant Google owns the most popular online video platform of YouTube and generates most of its revenue from advertising, but has also started offering Google Cloud services like its peers.
- Amazon is the e-commerce giant of the World, generating bulk of its business from the online store while adding third-party seller services & Amazon Web Services (Cloud platform) to its portfolio.
- And finally the social media giant Facebook, which generates the majority of its revenue from the advertising business. The 2.5 billion strong platform owns one of the most popular messaging apps in the form of WhatsApp. However, FB has recently jumped into the Crypto arena with the launch of its stable coin Libra to be used as a cross border payment mechanism starting in 2020.
Apple seems to be at crossroads yet again with iPhone shipments falling by a whopping 30% in Q1 2019 over last year as its global smartphone market share continues to slide, dropping to 11.7% only. With the overall market of new smartphones declining, the biggest risk it faces is the trade tensions between U.S & China, where a retaliatory ban by China on Apple products could cause its earnings to drop by as much as 30%.
Although its good to see these tech giants fueling the digital transformation with their innovative business models, others believe they should be held liable for questionable business practices & lax controls over the use of customers’ data – What’s your take on it?
*figures quoted as of July 05, 2019