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Webscale Network Operators: 1Q21 Market Review

Webscale surges to $1.84 trillion in revenues, on par with the telecom sector
The webscale sector’s growth accelerated in 2020. The sudden, widespread need to work and study from home increased demand for the cloud services offered by many webscale players. The need for social distance caused an uptick in usage of social media platforms such as those offered by Facebook. Online shopping was a prime beneficiary of pandemic-related lifestyle changes. Even though the pandemic has eased in many countries, webscale growth remained vigorous in 1Q21. Annualized revenues surged 23.7% YoY in 1Q21 to hit $1.84 trillion. That is a bit more than the $1.83 trillion recorded by the global telecom operator sector in the same time period. This is the first time webscale has exceeded telecom at the top line. 
Americas remain the largest regional market, but Europe grew faster in 1Q21
All regions saw significant growth in 1Q21. The Americas region remains the world's largest webscale region, accounting for 43.2% of 1Q21 revenues, ahead of Asia's 36.1%. Europe was the dominant region in 1Q21, however, on a growth rate basis. Europe's webscale revenues in 1Q21 totaled $87.4B, up 47% YoY, well ahead of Asia, which took second place with 38% YoY growth. The MEA market remains the smallest of the four regions, but its 37% growth rate outpaced the Americas in 1Q21. Further, several cloud providers are building out capacity in the MEA market, and the region's subsea cable connectivity is improving, so faster growth is likely on the way for MEA.
Annualized capex grew 29% YoY in 1Q21
While COVID-19 depressed the telco sector in 2020, strong demand for cloud services and ecommerce drove the webscale operators providing these services to expand investments considerably. The last four quarters, 2Q20-1Q21, have seen annualized capex reach new all-time highs. Annualized capex ended 1Q21 at $141.5B, up 29.0% from 1Q20. The non-tech piece of capex amounted to $61B, or 57% of the total, but grew much more slowly than...
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