“With its sleek iPod nano and all-in-one iMac computer, Apple is often perceived by its fans as a pre-eminent innovator,” Troy Wolverton writes for TheStreet.com. “It may come as a surprise, then, that much of the company’s recent financial — and stock — success has resulted from merely holding the line on one of the sources of that innovation: its spending on research and development.”
“Even while Apple’s revenue has skyrocketed in recent years — and even as expectations for future products and success have exploded — what the company has spent on R&D has risen only modestly. As a portion of overall sales, such expenses have actually fallen by more than half,” Wolverton writes. “Though analysts generally praise Apple for its frugality, some warn there’s a limit to how much longer the company can squeeze juicier near-term profits out of its R&D line.”
“Although there’s no hard-and-fast rule for what portion of its budget a company should devote to R&D, some analysts say Apple is approaching minimal levels. As a portion of sales, the amount Apple has spent on R&D has fallen steadily every year since fiscal 2001, when the company devoted 8%,” Wolverton writes. “Last year, Apple spent 3.8% of sales on development, and it spent just 3.2% in its most recent fiscal quarter. Apple hasn’t cut R&D spending. The company spent $534 million on development in fiscal 2005, which was 24% more than it spent in fiscal 2001. But the company has clearly been constraining the growth of development spending… Part of the reason that Apple can’t let its research spending decline much further is that the company has to bear costs that many of its PC industry competitors don’t. If it wants a new operating system for its Macintosh computers, for instance, Apple itself has to develop it; it can’t rely on Microsoft.”
Full article here.
MacDailyNews Take: It’s not how much you spend, but how well you spend. Clearly, Apple gets a lot more innovation for its R&D dollar than, say, Microsoft, for one bloated, wasteful example. Windows XP SP3, er, Vista is taking how long and costing how much to try to look like 2000’s Mac OS X beta on acid? Surely Apple will increase R&D expenditures if and when CEO Steve Jobs decides it’s necessary to accomplish certain goals.
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If apple doesn’t come out with something new in say the next year then I would perhaps agree. As is their designs are the best on the market. Even if the “old” designs used in the new intel machinesweren’t still fresh and way ahead of everyone else it could be argued that by not redesigning it went a long way to perceivably easing the transition ie there is no difficult transition.
I would say that really the only thing that could really do with a redesign is the iBook and for all we know we’ll see that anyway.
The iPod is pretty much perfect and there’s not a lot you can do to it cosmetically without totally overhauling it and doing something different – which we may see when/if they move to or add a more video orientated model.
The main thing for me though is that Apple has seen such massive growth, growth perhaps disproportionate to the market as a whole that they’re getting far better value out of their R&D spending.
As I said, give it a year then get worried.
macfanboy #12:
You may submit your CV to Apple anytime you think that you can do better. It seems that people like you do nothing of consequence, but only exist in a perpetual state of disappointment and impotence only interrupted by occasional frantic episodes of unbridled expectation and confused anxiety. My pragmatic advice to you is become a hermit thus avoid the risk of cynicism that comes from living in an imperfect world. We won’t miss ya.
maczealot are u one confused monkey.
You are the one spouting the and I quote you directly:
“Rome wasn’t built in a day, folks. Can ya jus’ wait till 10.5 and Macs with the new 64-bit dual core processors are released. Some of ya’ll actin’ like a buncha nervous nellies. Tighten up, fellas.”
You are the one beating the “Can ya jus’ wait…” drum. LOL
maczealot: “You may submit your CV to Apple anytime you think that you can do better.”
At least I have one that I could submit to Apple if I wanted to work there.
Your CV summed up in a too long sentence: Spend my sparetime pontificating at a mac chat site in between shifts at McD´s.
Apple absolutely needs to put some development money into one product.
AppleWorks Pro.
They already have a great office suite here but it is so old. Update this and merge in Pages and Keynote, make it universal and work on PCs and Linux. That would shake up the world more than some new speaker box.
Skimp all you want Apple.
It works.
macfanboy #12:
I apologize. I hoped that by using monosyllabic words I could express ideas more clearly for you. I did not realize that you do not understand rudimentary English. Let me explain, “wait” is a word that expresses a sense of a serenity and patience.
So you claim that you could actually work at Apple, presumably to usher in a new decade of stunning intellectual and technological advances, but decide not to because you are (a) too lazy, (b) too incompetent, or (c) all of the above. Hmm. More impotence and inaction. On second thought, I believe that Apple does need someone to clean the lavatories at night. Are having comfortable shoes and a uniform your impressive qualifications for “working” at Apple?
Can I say at this point, and in the best possible taste: derr fred.
Aussies will understand
macz – LOL
You buy a new dictionary?
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We all know you are a high school student from your previous replies and you use your momma´s 5 year old iMac. LOL.
When you have a true long-term plan and have finally gotten all the ducks and elements in a row, then you can cut throught all the doo doo and cut R & D costs and still set the innovation standard at the same time. Apple is the only one who is even close to being able to do this. They have dialed in every aspect of their business the last few years. The smartest thing Steve ever did for Apple is to simply have a plan.
macfanboy #12:
How could any sane person argue with your logic?