Market Research Report
Webscale Network Operators: 4Q18 Market Review
|Published by||MTN Consulting, LLC||Product code||753492|
Delivery time: 1-2 business days
|Webscale Network Operators: 4Q18 Market Review|
|Published: April 11, 2019||Content info:||
MTN Consulting's 4Q18 WNO Market Review analyzes the network infrastructure spending and financial position of webscale network operators (WNOs).
WNOs are web-centric companies whose operations and services rely heavily on hyperscale data centers and supporting connectivity. They typically have tens or hundreds of millions of customers/users, and rely heavily on scale and network effects in quest for profitable growth. Most WNOs build and operate data centers, but some rely largely on rented/leased resources. Netflix, Snap and Twitter are notable examples. Each of these spends heavily on cloud resources from other providers and is a candidate to build organically in the future. Or, purchase existing assets during a market adjustment.
WNOs tracked in this report include the "Top 8" companies (Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, and Tencent) and over 20 others: Altaba, Booking Holdings (formerly Priceline), ChinaCache, Cognizant, eBay, Fujitsu, HPE, IBM, JD.COM, LinkedIn, Netflix, Oracle, Qihoo 360, Salesforce.com, SAP, Sina, Snap, Sohu, Twitter, Weibo, Xunlei, Yandex, and YY.
"Global technology companies continued their spending spree into 2018, building and expanding their "webscale" networks. These networks are centered around data centers and undersea cable systems that support network traffic from the tech companies' online retail, video, and social media platforms, along with cloud services.
The companies in this webscale network operator (WNO) sector spent more than $100B in capex for the first time in a single year, investing $115.4B in 2018 and up by a robust 48.4% YoY. This surge impacted free cash flow margins, and the sector's cash & short-term investments fell by 9.8% in 2018 YoY. The capex hike during the year was primarily led by the "Top 8" webscale companies that include eight of the world's largest technology firms - Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, and Tencent.
Webscale operators continue to branch into new markets, including hardware, both through R&D and acquisitions. M&A activity in the sector remained vigorous in 2018, with Alphabet, Amazon, Microsoft, Oracle, and Salesforce each recording sizable related costs. The M&A climate remains strong for the sector given its high cash reserves. Total debt for the sector is manageable overall, at $448.0B, or $136.7B less than cash & stocks. Some individual companies could face debt issues in an economic downturn, however, or due to regulatory pressure."
File format: Excel