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The Top 55 in Tech: Market Findings and Other Items of Interest

Bottom mark chaos

One of the things we track internally, for the sake of contextual curiosity more than anything, is the market performance of firms that can be at least loosely described as technology oriented. While it’s foolish to assign any serious import to rankings based on the vagaries of market performance, it is nevertheless interesting to understand how the market values or does not various entities, particularly in relation to one another. Besides simple market metrics such as market capitalization, it’s also useful to be aware of the wider context: when was a firm founded? How does it generate revenue? From these patterns, and particularly from watching them over time, it is possible to get a sense for how the technology landscape is evolving over time, and from there understand what adaptations may be necessary moving forward.

The list of the 55 largest public technologies entities that we’re tracking at present, ordered by current market cap, is available here. Please note, however, that no claims are made that this list is definitive. The most notable omission is carriers, and their omission looks increasingly problematic as they push further into cloud and network related services. It’s likely they’ll be added in future iterations.

If there are other public entities you believe to be missing, then, by all means let us know in the comments and we’ll review them and amend the list as necessary.

With the aforementioned caveats that the list is not definitive and that market perceptions do not necessarily match company merit, a few notable takeaways from a quick examination of the list.

  1. Age: The median age of the Top 55 tech companies is 28 years old, meaning that a representative entity would have been founded in 1985. This is less than surprising in one sense, given that larger companies have long leveraged startups as a means of outsourced innovation; rather than enter higher risk emerging markets themselves – which they are not built to attack in any event. Instead, they can sit back and attempt to acquire the successful innovators, considering the M&A premium their cost of innovation. Still, it’s interesting that the shape of the technology market, often considered one of the fastest moving industries in the world, is in part defined by the decisions of companies that might have been founded the year that New Coke debuted and Back to the Future was released.
  2. Revenue Source: Of the 55 companies tracked, 21 derive their revenue primarily from the sales of software while 34 of them do not. In other words, the average Top 55 technology firm is around one and a half times more likely to not generate the bulk of their revenue from software than it is from it. Interestingly, the Top 25 members of the list are even less likely to rely on software as their primary revenue source; 7 are primarily software oriented while 18 are not. Make no mistake: software is absolutely eating the world, as Marc Andreessen has said. Every company on this list relies on software for their business. But the data indicates that more companies are making money with software rather than from software, which is something of a departure from a decade ago when Microsoft’s dominance encouraged many to replicate the software revenue model.
  3. Annual Performance: In market performance over time, here is the list of companies in descending order of market cap generated per year of existence. 1) Google ($20B/year), 2) Apple ($11B), 3) Facebook ($10B), 4) Amazon ($8B), 5) Microsoft ($7B), 6) Cisco ($5B), 7) Oracle ($4B), 8) Qualcomm ($4B), 9) Baidu ($4B), 10) Taiwanese Semiconductor ($3B). Given that this measurement advantages to some degree younger firms, the presence of entities like Apple, Microsoft and Oracle is impressive.
  4. The Arena: A few relative valuations that may be of interest. Google is currently worth almost 10 Yahoo’s. Dell ($22.4B) is currently worth less than LinkedIn ($23.1B). ARM Holdings is worth less than you might expect, given its importance; Nokia is currently worth ~$2B more. The world’s only pure play open source company in Red Hat, meanwhile, is worth almost as much as Teradata ($10.2B to $9.9B) and more than Electronic Arts, F5 and Rackspace. And while Qualcomm tends to be something of a behind the scenes player, its Top 10 performance has it more valuable than VMware, Yahoo and Salesforce.com combined.
  5. Industry Size: The combined worth of the these entities is $2.8T.

Again, it’s important not to read too much into the above, particularly with respect to market valuations which are volatile by nature. As a snapshot of a given point in time, however, it’s useful to understand how companies and their strategies are perceived more broadly, and what this means for them moving forward.

Categories: Market.