Webscale Network Operators 2023 Market Review - Webscalers Spending Big on R&D and Capex Despite Weak Revenues; Headcount Falls 1% YoY in 1Q23, the First Decline in Over A Decade

DUBLIN, Nov. 30, 2023 /PRNewswire/ -- The "Webscale Network Operators: 3Q23 Market Review" report has been added to ResearchAndMarkets.com's offering.

The global webscale network operator (WNO) market has demonstrated notable resilience and growth, according to the latest market review focusing on developments since 2011. An in-depth analysis of the period between the fourth quarter of 2022 and the third quarter of 2023 uncovers compelling transformations in revenue, research and development (R&D), capital expenditure (capex), employment, and energy consumption.

Rising Revenues amidst Economic Challenges

The review reveals that webscalers have amassed a remarkable $2.32 trillion in revenues, marking a 3.7% year-over-year (YoY) increase. This improvement comes despite challenging macroeconomic climates and fluctuating technology adoptions rates, showcasing the sector's robustness. The report also highlights the steady increase in cash and short-term investments, evidencing the financial fortitude of major players.

Strategic Spending in R&D and Capex

Spending patterns have shifted as the WNOs invested $289 billion in R&D, a 13.1% YoY increase, signifying a steadfast commitment to innovation and development, particularly in generative AI and personalized chip manufacturing. Conversely, capex experienced a 3.8% YoY decrease, settling at $192 billion. Despite a momentary deceleration, future projections remain optimistic as companies anticipate growth driven by groundbreaking advancements in AI.

Energy Consumption and Sustainability Efforts

As part of the commitment to sustainability, WNOs' energy consumption has been scrutinized, particularly regarding data center operations. The ongoing expansion and resultant energy consumption surge (16% YoY) further underscores the urgency for implementing sustainable practices within the industry.

Compelling Regional Development: US Maintains Leading Position in Webscale Capex Investment

Capex trends have revealed staggering figures, with the US accounting for over half of the global webscale capex, a testament to the nation's leadership in technology investment and infrastructure development. However, diversification is anticipated as Chinese cloud service providers and other international entities position themselves to capture a larger market share.

Comparative Market Dynamics: Webscale vs. Telecom

The market landscape has evolved dramatically over the past decade, with webscale capex challenging the supremacy of traditional telecom investments. Although lower, it remains significant due to its focused spending patterns and innovative edge, influencing a wide range of vendors and product offerings.

• Amazon's proactive stance anticipates a capex of approximately $50 billion for CY23, influenced by generative AI developments.
• Microsoft signals an increase in capital expenditure in the upcoming quarter, bolstered by cloud and AI investments.
• Alphabet commits to ongoing investment in technical infrastructure, with an emphasis on AI.
• Meta plans to invest between $27 billion and $29 billion in 2023, with an expectation to further ramp up in the following year.

Looking Ahead: Spending Forecasts and Market Expectations

The forecast for 2023 capex stands at a tentative $218 billion, reflecting cautious optimism amid a dynamic economic landscape influenced by rising interest rates. The report concludes that while the tech-based capex has overperformed, the overall capex outlook appears promising, bolstered by cutting-edge developments in generative AI.

The Review details not only financial aspects but also addresses employment and sustainability practices, providing a comprehensive perspective on the state-of-play in the webscale network operator space as it continues to shape the future of global technology and internet infrastructure.

This market review enriches the conversation about the trajectory of the WNO sector, delivering insights essential for industry stakeholders, investors, and technology visionaries looking to navigate this rapidly evolving landscape.

Company Profiles

• Alibaba
• Alphabet
• Altaba
• Amazon
• Apple
• Baidu
• ChinaCache
• Cognizant
• eBay
• Fujitsu
• HPE
• IBM
• JD.com
• LinkedIn
• Meta (FB)
• Microsoft
• Oracle
• SAP
• Tencent
• Twitter

For more information about this report visit https://www.researchandmarkets.com/r/g00r3a

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SOURCE Research and Markets