Webscale Network Operators: 4Q22 Market Review

Webscale Network Operators: 4Q22 Market Review

This report reviews the growth and development of the webscale network operator (WNO) market. In the most recent 12 months (2Q22-1Q23), webscalers represented $2.25 trillion (T) in revenues (+3% YoY), $280 billion (B) in R&D spending (+22% YoY), and $201B in capex (+7% YoY). They had $632B of cash and short-term investments (-5% YoY) on the books as of March 2023, and $549B in total debt (+6% YoY). Webscalers employed approximately 4.10 million (M) people at the end of 1Q23, down from 4.14M in March 2022 but up from 3.62M in March 2021.

Over the last 6 months, many webscalers have announced layoffs, and some are also rethinking capex plans. The macro climate has made all of this worse, as high inflation and rising interest rates slowed investment plans. However, the webscale market has also gotten a boost in the last 6 months with the rapid takeoff of generative AI platforms like ChatGPT (partnered with Microsoft), Alphabet’s Bard, and Baidu’s ERNIE Bot. Business models to support these new platforms are nascent, but key webscalers see the platforms as opening up new use cases for their networks. There is more enthusiasm now for investing in advanced AI and data centers to accelerate the maturity of these new platforms.

The information contained in this report was obtained from both primary and secondary research, supplemented by the expertise of MTN Consulting's analyst team.

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