Apple's R&D, Rising Cloud, and Amazon Ads

Today’s Topics

Hello, today we have 3 charts for you exploring:

• R&D by Big Tech: Apple spends the least on R&D (as % of Revenue)

• Cloud: Lots of headroom for the Cloud industry to keep growing

• Digital Advertising: Amazon is now the 3rd largest in the industry

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Companies spend on R&D (Research & Development) to keep their existing products and services competitive, and to innovate. Read more about this cost

Across the last 5 years 2017-21, on avg. , these 6 companies spent a total of ~$112 billion dollars on R&D per year.

• Amazon: $37.2B

• Google (Alphabet): $24.6B

• Microsoft: $16.9B

• Apple: $16.5B

• Facebook (Meta): $14.9B

• Netflix: $1.6B

While, these companies have different business models, Apple only spent 6% of its revenue on R&D while Meta spent 20% of its revenue.

Nevertheless, the relatively lower spending on R&D hasn’t impacted Apple much, as it continues to be the most valuable company in the world.

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Amazon, Google and Microsoft recently reported astonishing figures for their cloud business:

Very few businesses grow, this fast, at this scale.

Can they keep growing at this rate in future?

If you look at the chart, the worldwide IT spend is ~$4.4 Trillion, and Cloud is still only a small fraction of it (about 11%).

There are still trillions of dollar of IT spend left which can go to Cloud in the future.

We know “Software is eating the world”, but it looks like “Cloud is eating the software / IT world”

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Social Media companies are under pressure these days with the macro slowdown impacting digital advertising spends.

In fact, Facebook (Meta) reported its first ever revenue decline this quarter.

However, Amazon has grown to become #3 in the industry. Two reasons why Amazon may be faring better than others:

1. Unlike others, Amazon is not affected by Apple’s privacy update which lets users opt out of ad-tracking

2. People are on Amazon to shop. So user intent is high and Amazon may offer a better ROI to brands on ad spend

Note: This chart doesn’t have TikTok who is still early on monetization. Its est. revenue is low (<$2 billion)

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More data bites

1. Europe gets life right, but work wrong.

2. There is a lot of talk about interest rates changes and its impact on stock markets. This visualization shows the interest rates across the globe.

3. Pinterest lost 2 million users since last year. Is it in trouble?

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