The Big Six in Q4 2016

Every quarter, I do a comparison of the financial and operating results of the “big six” consumer technology companies – Alphabet, Amazon, Apple, Facebook, Microsoft, and Samsung – for my clients as part of the Jackdaw Research Quarterly Decks Service. And every quarter, I break down some of the highlights for Insiders too – here’s this quarter’s edition.

Revenues – Apple Stabilizes, Alphabet Passes Microsoft

On the revenue front, we saw Apple return to growth (helped by an extra week in its fiscal quarter) and stabilize its lead among the big six:

That’s the trailing 4-quarter view and it also shows Alphabet passing Microsoft for the first time on this basis, though it’s actually been ahead of Microsoft for three quarters straight on a quarterly basis. From a revenue growth perspective, Facebook continued to outpace everyone else in sheer percentage terms:

However, this was the second straight quarter in which Facebook’s percentage year on year growth was slower than the quarter before. Given management’s remarks about saturating ad load leading to slower growth later this year, we can expect this line to continue to trend downwards for the foreseeable future. For now at least, its growth rate is the envy of every other big tech company. Apple’s growth swung through negative territory for three straight quarters but was back above water this quarter and should stay there for much of the next year at least. Interestingly, Samsung, Apple, and Microsoft all had very modest growth this past quarter, albeit coming from rather different prior trajectories. It’s also worth noting Amazon had slightly slower overall growth this quarter, driven by slower core e-commerce growth. Again, the numbers are nothing to sniff at – it still grew by over 20% year on year – but there’s not much transparency from Amazon’s management over why the slowdown happened or whether it will continue.

Profits – Apple’s Huge Quarter puts Everyone Else in the Shade

From a profit perspective, Apple once again put everyone else in the shade in the fourth quarter, which is always its biggest of the year:

In fact, Apple generated more operating profit in the quarter than Alphabet, Amazon, Microsoft, and Samsung put together. That certainly doesn’t happen every quarter but this was Apple’s biggest revenue quarter ever and, while Samsung had its best quarter in several years as well, it generated only about a quarter as much operating profit. Facebook’s operating profits continue to trend upwards and look like potentially paling Microsoft or Alphabet in the next few quarters, which is remarkable given its revenues are a fraction of theirs. Amazon, meanwhile, keeps bumping around at the bottom of the pile, with just over $4 billion in operating profit over the past year, or less than 1% of the total profit of this group over that time period.

Hiring Continues Apace at Amazon

To conclude, let’s look at hiring and total employee numbers. Note here Apple and Microsoft only report headcount once a year with their 10-K filings, so I’ve used estimates for some quarters. Everyone else reports quarterly (except Samsung, which doesn’t report numbers for the company as a whole).

The most astonishing line here is obviously Amazon’s. It was just below 350,000 employees at the end of 2016, which is about 20,000 more than Alphabet, Apple, Facebook, and Microsoft combined. It hired 110,000 in the past year alone (just below the size of Apple or Microsoft’s total workforce) and it’s more than doubled its headcount in the past two years. Of course, the vast majority of these new employees are warehouse workers paid just above minimum wage rather than the high-cost engineers most of these companies employ (Apple’s retail store employees are the closest equivalent, but more skilled and better paid). As a result, Amazon’s revenue per employee also looks very different from the rest:

Apple’s revenue per employee has come down a bit over the past year or so as a result of its dip in revenues, though it stabilized a little last quarter. But Amazon continues to trend steadily downwards as its fulfillment center workers increasingly dwarf its higher paid office workers. Facebook’s revenue per employee stagnated in 2014 as a result of several acquisitions but returned to growth over the past year or so and is now fast approaching Apple’s. Alphabet’s revenue per employee, meanwhile, remains remarkably consistent at around $1.2 billion per year, albeit with a little bump last quarter from Pixel and other hardware sales.

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Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

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