Global Comms Revenue Comparisons

[Update: We have added data on profitability for the companies. ]

Last week we lamented the declining strategic position of the once-mighty telecom equipment vendors. One reader asked to see how this played out in the company’s financials, and we are at heart a customer service organization team, so here we will examine those results. Below are the revenue figures Nokia and Ericsson, set in comparison to peers Huawei and Cisco, as well as the the three leading cloud service providers – Amazon AWS, Microsoft Azure and Google Cloud in US dollar, millions..

A few notes on these numbers. Amazon and Google do not break out cloud revenue prior to 2019, and Azure only goes back to 2018. Ericsson, Huawei and Nokia report results in other currencies (Swedish Krona, Euros and Renminbi, respectively). We used the most recent exchange rates for all three, and for Nokia and Ericsson there is probably some difference. Huawei is total revenue, including handsets, but obviously their numbers reflect the downturn after the US government cracked down on their operations. All numbers were sourced from company annual reports.

Raw numbers can only tell us so much. Since we are interested in these companies’ respective revenue growth, we prepared the chart below showing common size growth with 2019 = 100 as the base.

And here is the data behind the pretty pictures.

Seen in this light, the trend is fairly clear. The cloud service providers are seeing strong growth, The telecom equipment vendors are not. Note that this series covers the period when 5G deployments were running full tilt, including the very strong pandemic years. Those years are now over, with both Ericsson and Nokia reporting year on year declines in their latest quarterly revenue. So even with that massive 5G tailwind, neither company grew much. It is also worth noting that even as Huawei was forced out of many markets, neither Ericsson nor Nokia picked up much share. True, their 2022 revenue was up a bit, but that goes back to the 5G surge and Huawei’s decline seemed to have bottomed out in 2022.

Some will argue that comparing these companies with the cloud service providers is an apples to oranges look. Which is fair enough, we are talking about very different businesses here. That being said, the cloud service providers are building infrastructure for global data networks, which is theoretically what Nokia and Ericsson’s equipment is used for as well.

All of which is to say that Nokia and Ericsson look to be increasingly positioned as afterthoughts in the market to build out global telecommunications systems.

After publishing this post, we realized we already had all the data to look at these companies’ profitability as well. The same caveats as above apply. We do not have data before 2020 for GCP and AWS. Importantly, Microsoft does not break out Azure directly, it only reports “Intelligent Cloud” which includes a lot of other products

Intriguingly, Cisco is among the most profitable of the group reflecting their long transition from technology growth company to Oracle-like software and licensing company.

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