“For a company that makes as much money as Apple, you might be surprised to learn that it spends far less on Research and Development (R&D) than many of its competitors, including bigwigs like Google, Microsoft, and Samsung,” Yoni Heisler reports for TUAW.
“That’s not to say Apple isn’t keen on R&D. On the contrary, Apple openly acknowledges in nearly every SEC filing that continued investment in R&D is critical to the company’s ability to compete and the future ‘development and sale of innovative products and technologie’,” Heisler reports. “With Apple’s 2013 books officially closed, I took a comprehensive look at Apple’s Form-K filings with the SEC in order to get a crisper picture as to how Apple’s R&D expenditures have changed over the last 19 years.”
“As a point of reference, Apple in 2013 spent $4.5 billion on R&D initiatives, a figure which Apple says was ‘driven by an increase in headcount,'” Heisler reports. ” Below is a chart mapping out Apple’s R&D expenditures from 1995 through 2013.”
Much more in the full article here.
Unlike those other companies, the more money Apple spends, the more amazing their products become.
It is interesting to follow the R&D spending trend and associate it with important Apple product releases…
Apple spent relatively little on R&D in the late 1990s, and spending actually dropped substantially after Steve Jobs return as iCEO. Compared to R&D spending in 1997, Apple spent less annually on R&D until around 2004. Yet OS X was released in 1999, iTunes in 2000, and the iPod was released in October 2001. All three of these products were very critical to Apple’s renaissance.
Relative to the profits that the iPhone has generated, Apple spent a relatively small amount on R&D leading up to the release of the iPhone in 2007.
R&D spending from 2007 to 2010 rapidly increased, yet still totaled less than $5B over that four year period. In 2010, the iPad was released – the second most important profit center for Apple after the iPhone.
During the three-year period from 2011-2013, Apple has spent roughly $10B on R&D, over twice the amount spent during the four-year period from 2007-2010, and roughly equivalent to Apple’s *cumulative* R&D spending over the 15-year period from 1995 through 2010. Either Apple has radically changed its definition of “R&D,” or the pipeline of new products is even more extensive and amazing than Tim Cook has hinted.
The spending almost doubled since Jobs died. Not to mention it has been (almost) doubling every two years since 2004.
Though as a percent of revenue it’s not nearly as high as it was in the early 2000s.
In reading these posts, I think most people missed that graph!
increase in headcount = fat
It’s time to start laying off people and trim some fat.
Unless they’re getting their money’s worth out of those people and need them due to the complex and diverse nature of the products they are developing.
Not really, with all the stuff Apple does even if the numbers within individual groups/teams remain broadly the same, the number of groups/teams would be expected to go up. I mean, they’ll have teams working on every aspect of the iPhone’s hardware and technology is way more complex now than it was, especially with Apple’s exacting standards. They don’t just shove a load of chips in a case and release it.
This is what Apple reported in their 10K:
“The growth in R&D expense was driven by an increase in headcount and related expenses to support expanded R&D activities.”
Apple’s head count is increasing because of increased R&D. I wouldn’t call R&D “fat”.
Go run Dell or HP or some other company with that misapplied business philosophy of cutting every year no matter what, it’s part of the reason they’re not doing well. It’s not fat if it’s useful.
Between the time you were a baby and now you increased your realtime cell count more than 10x, including to bones and muscle. Maybe you should consider that “fat” and trim it away, yes?
You have no friends…
Nice try Samsung Boy but it’s not going to work.
Apple has stated in the past. We have come to find out that we are really good at software. Huge profits will come from Apple’s future “Services”. Thus the reason “WHY” iTunes ALONE is more profitable than Xerox & Time Warner Cable. Apple makes it “LOOK” simple…. News flash …. It ain’t.
Except other companies are better at software than Apple is. Especially cloud related software.
Not when it comes to seemless integration across desktop/laptop/mobile devices. Developers for Windoze/Linux are a lazy bunch. it takes TIME to do it RIGHT the FIRST time. All i hear from dead wood dolt developers is how Apple is difficult to develop for, due to Apple’s stringent rules for their platform. Look no further than WinBlows 8.1 for proof of the GREATNESS of Microsloth…. pff….. gmafb….. Apple is in the drivers seat & is by no means complacent. Apple will be lucky to gain any significant market share in the mobile phone space. UM YEAH…… did you get the memo? You might try crack berries site. Palm may have some advise. Oh thats right…. They were “BETTER” at handheld devices than Apple…. Right?
Apple forces other tech companies to invest heavily in R&D, if they’re to keep pace with the Tech giant, let alone break new ground.
Of the Top 50 companies ranked in R&D, Samsung and Microsoft are 2 and 3, respectively while Apple is ranked 46th.
45 companies spend way more than Apple, and yet Apple is bigger than them all.
You’re right, Apple had the groundwork laid out with NEXT, then when they brought Steve back, and That’s when the wheels began to really churn. the increase began with OS X, the iTunes store, then iPod development, then really began to grow with the iPhone, (someplace no one thought Apple could excel in) then again with the iPad. these devices built by Apple laid the groundwork for the R & D to grow, and further expand Apple’s ecosystem. Chips, sensors, information compacting, all this takes time and skill to build. Also, remember that when Steve came back, he knew and understood Next’s capabilities, and used it all the way to the bank! After all, he did sell it to Apple.
With every product, Steve Jobs gave his company a five-year head start. He would have given them more but the technology wasn’t ready.
When Steve Jobs was pondering the kinds of future-tech that intrigued him, especially when he was in his “right” mind, I have no doubt whatsoever, someone was taking copious notes.
Steve Jobs will forever be remembered as a man who never wasted a moment of R&D down the the very last drop.
No one is going to catch Apple, they’ll have to blaze their own trail and acquire a following. But, if their like Samsung, who’s path runs parallel with Apple’s, will always be second-rate.
Apple is Second to None. They’re far from perfect but they are the best in the world.
’s success and efficiency in R&D can be attributed to its ability to attract the best minds.
“Birds of a feather, flock together.” – Aristotle
It doesn’t take an Aristotle to know that if an Eagle is on top of a Dove, it’s probably eating lunch.
lol, better said.
There’s only one chart here that is at all useful, the one where R&D is graphed as a percentage of net sales. All the others are pointless and don’t take into account the size of the company. The pie chart completely misunderstands the point of a pie charts. It’s like making a pie chart of the temperature on April 17th, going back to the year 2000.
The graph looks like a drug addiction.
Oh, look, it’s a hockey stick.