Apple’s massive R&D expenditure indicates myriad projects in the pipeline

“Famously secretive Apple doesn’t tip its hand on new stuff, but its fiscal second quarter report Tuesday showed research and development spending surging by 31% year over year, even as revenue slid by 13%,” Dan Gallagher reports for The Wall Street Journal. “That means Apple spent about 5% of its revenue on R&D during the period, its highest level in years.”

“In the company’s conference call Tuesday, CFO Luca Maestri said the company has a ‘much broader portfolio’ of internal initiatives and projects that includes more ‘in-house technology development’ than it used to have,” Gallagher reports. “Presumably this includes Apple’s widely rumored electric car project.”

“Most of these efforts won’t bear fruit anytime soon – at least not soon enough to appease investors who cut nearly $35 billion off Apple’s market value Wednesday,” Gallagher reports. “But it is a sign the company isn’t just waiting to dial up the next iPhone.”

Read more in the full article here.

MacDailyNews Take: A little birdy tells us that, when it comes to what you’ve seen so far from Apple, you’ve hardly seen anything yet.

Apple gets much more bang for its R&D buck than Google and other tech companies – November 30, 2015
Massive R&D increase suggests Apple is working on something huge – May 4, 2015


    1. I predicted this 5 years ago.

      -Cook will ride the coat-tails of Jobs for 3-5 years.
      -The product pipeline would dry up, with Cook on his own.
      -Once Cook would be on his own, Apple would retract financially and otherwise.
      -Under Cook, R&D spending would skyrocket, just like it did with Sculley. But Apple wouldn’t commercialize much from this.

      The increased R&D is exactly what happened when Jobs left Apple last time and hardly any products got commercialized from it. This is effectively what almost bankrupted Apple. Sculley ran it into the ground because he wasn’t a “product guy”. He was also a doofus.

      What you’re seeing is a repeat. Jobs is not replaceable. His style of leadership and building out products can’t be replaced. Cook is a shell of Jobs, nothing more.

      All of this R&D spending is not a good sign at all. Apple will continue along this path, and will start to contract slowly over the next year. The elusive “next big hit” will remain that: elusive. Because there is nobody around to say “no”. No true visionary. No more “Product Guy”.

      We have a person who inherited the keys to a kingdom who has never founded his own business. A privileged person too comfortable and distracted. A person simply not suited for this.


      Your nerdy arrogance needs to stop. Nobody needs an Apple Watch. And it’s simply because it has very little reason to live. It’s screen size makes it a horrible computing device: it’s worse at many things compared to a smartphone.

      A real “Product Guy” would understand this. He’d say no to a watch for now. He’d work to have much longer battery life, a thinner device, and some useful Apps beyond just a couple. If these latter can’t be done, then it’s deac.

      A real Product guy would:

      -Eliminate last century non retina screen technology from the product line up.
      -Finish what the company started with Apple TV, having Apps as channels and ushering in self-published TV channels.
      -Get quicker upgrades in MacBooks and iMacs and Mac Pros.

      And more…

      And a real Product Guy would stay out of politics.

        1. Just because someone disagrees does not mean they’re a troll. That’s the problem here. I’ve spent thousands with Apple but don’t see them going in the right direction and, everyone can have their own opinion. That’s OK. We all hope Apple does better.

      1. You forget that people were saying the same thing about Apple when Steve Jobs was there. Apple only enters new categories every several years. The iPhone->iPad released took extra time since so many screen sizes needed to be covered.

        I do agree;
        – Eliminate non-Retina screens
        – Turn Apple TV into a powerhouse of open TV publishing, games (that require real controllers), real productivity apps and an interface to support that, and Facetime camera for room sharing.
        – Regular MacBook, iMac, Cinema Display upgrades and a new real “Mac Pro”. For Heaven’s sake, they need to aggressively fight and win PC Wars 2.0. Kill Windows! Take marketshare, increase Mac revenue 5 times!

        But they have VR and AR devices in the works, Tim Cook even mentioned those areas. So its way to soon to declare that the well has run dry.

        1. Steve Jobs was a genius. Some of you still live in denial. Jobs is gone, and Apple isn’t as good anymore.

          Cook was a deer in headlights on the earnings call. Cook simply can’t believe Apple Watch hasn’t taken off. And for the rest of us Product Guys, we knew it wouldn’t.

          Then we have the Apple TV. This was Apple’s HUGE opportunity to have its next big hit. Cable and TV really need fixing. It’s a problem that needs to be solved. And it’s not a speculative market like smartwatches.

          But Cool didn’t make it happen. How many people would have run to the Apple Store to get one of it had Apps as channels crom major networks so you could build your own cheap programming and dump cable with a bunch of useless garbage? Lots of you would, and so would have many others. And it would have ushered in the era of self published TV channels.

          But none of this happened. Cook can’t go deep enough and get get deals done.

          The we have 12″ Macbooks: those really should have replaced the air and come in different screen sizes with more power. But Cook offers it as one screen size and crappy power.

          Apple has a confused product matrix and are now afraid to change. It’s like Cook doesn’t want to retoo machines.

          The furious pace of innovative products is right now, over. Apple totally has the power to turn things around, but Cook has to go. And they need to simplify and focus on a few key problems worth solving, not some stupid tiny screen watxh with one day battery life.

  1. Something needs to happen soon. As a Mac user and shareholder, I’ve never been so disappointed as to the current state of hardware (primarily Macs) and software.

    The Mac has become an after thought with minuscule or no updates. Apple software is really become Apple abandonware. Capable programs are being replaced with substandard alternatives. Even OS X is being made less functional and less intuitive and more like iOS.

    It seems Apples philosophy is rapidly becoming “if you can’t do it in iOS, you can’t do it OS X.”

    1. It’s true. For the last ten years, Apple best and brightest (you know, the ones who can only tell their friends, family, and even coworkers that they’re working on “secret projects”) have been diverted from Mac OS X, Pro Apps, iWork, and other Mac projects onto iOS and the damned watch (but notably not Apple TV). It’s a shame. I am hopeful that the new campus will afford them the space to expand engineering fast enough to play catch up with themselves for a while. Maybe we’ll see more desktop innovation after that. Who knows.

    2. As a Mac user ‘forever’ I can say with some enthusiasm, that even a 6 year old MacBook Pro handles a lot of intensive tasks with ease and is relatively speedy enough to not slow me down.

      We have reached a point where most people have far more performance than we need. Hence, why keep updating processors, etc. every year when it doesn’t “help much.”

      1. That just suggests its time for Apple to produce cheaper Macs (high quality, high margin) but with moderate specs that people really need.

        Fight the PC Wars 2.0, kill Windows, increase Mac sales 5x!

        The more Macs are used in the world, the more iOS will be the default for corporations and consumers. And vice versa.

        It makes no sense to drop the ball on Macs when they complement and enhance iOS devices and unlike the iPhone, Macs have lots of headroom to grow.

  2. Effort should not be confused with results.

    R&D budgets, if not properly overseen, can be entirely misused. Which of course begs the question that no one else here seems willing to honestly explore: has Apple become too big of a ship for Cook to steer?

    I, for one, would not mind if Apple offloaded its non-core businesses, and Cook with them. iCloud and Apple Music are distractions, not the future of computing as he thinks they are. And cars are a money pit. Stop wasting money on transportation and focus on fixing the important stuff!

    1. Very true about R&D dollars. Microsoft for two decades had absolutely huge R&D budgets that yielded, in the end, nothing of lasting value…. except maybe Clippy and Microsoft Bob….?

      1. As I recall, Apple has invested far less in R&D than Google and maybe Microsoft/year.

        That means that Apple has been very focused and very VERY efficient in using its dollars to become nearly the most valuable company on Earth.

  3. You all seem to think that Apple needs investors, and whiny ones at that! Can’t think of another company that makes over 10 billion in profit a quarter and is considered a failures. Let your failure move to my country and buyout all you whiny investors at the same time. I hope those who own Amazon stock we see dividends one day before you die. Ingrates

  4. Every successful company needs a visionary. One who can see the future and plan for it. When the visionary dies (IBM, HP, etc.) and is replaced by a “manager/planner/accountant”, the company has reached middle/old age and will thrive only if there is a source of vision somewhere in the company. It happens to all companies. It looks like Jobs tried to put Ives in the visionary position and insulate him from corporate attack. The question is whether Ive’s vision is up to snuff.

    Note, I didn’t include MS in the visionary list. Bill Gates was extraordinarily lucky to have bought out an OS company (CPM?) and got IBM to license it from him for their PCs. IBM put them into the business world and the monopoly position they still occupy in many areas. Balmer is the best example of a total lack of vision in a CEO.

    For the long haul, the company needs to have very talented people with good ideas and execution skills, and management who will listen to them and vet the best ideas. I would pit Cook and crew against any other computer tech company in the world. Name another one with anywhere near the expertise of Apple.

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