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Webscale Network Operators: 3Q21 Market Review

Revenues for the webscale sector of network operators passed the $2 trillion mark in 3Q21, on an annualized basis, growing 29.1% YoY to reach $2.06T. The cloud is part of this; for the top three (AWS, Azure and GCP), cloud revenues for the 3Q21 annualized period totaled $105.4B, up 35% YoY. Cloud growth is just a sliver of the webscale revenue pie, though. Total revenues for the webscale sector passed the $1 trillion mark just over 4 years ago, in the 2Q17 annualized period. Big gains in ecommerce, advertising, and device revenues account for most of the growth. The webscale sector is now comfortably larger than telecom, which recorded $1.89 trillion in revenues in the 4Q20- 3Q21 period.
On a capex basis, telecom remains far ahead, with $317 billion in 3Q21 annualized capex. That’s nearly double the webscale total of $165B, but webscale is gradually bridging this gap: in the 3Q21 annualized period, webscale capex spiked 35% YoY. In addition, webscalers invest heavily in R&D, and have bleeding-edge requirements for the technology they deploy in their network. That has led them to drive the creation of many new innovations in network infrastructure over the last few years... These span semiconductors, optical transmission and components, intent-based routing, network automation, and other areas. Facebook is perhaps the most influential of all webscalers due in part to its openness and support for the OCP and TIP organizations.
Europe records best recent revenue growth
By region, the Americas is dominant in the webscale world, accounting for 43.8% of annualized revenues through 3Q21. Asia-Pacific follows with a 35.0% revenue stake, then Europe (18.5%) and MEA (2.8%). The strongest recent growth is coming from Europe...

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Matt Walker
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