Apple is spending a ton of money on secret projects

“Apple spent $2.56 billion on research — more than it spent in any year-long period before 2012 — in just this past quarter alone,” Mike Murphy writes for Quartz. “It’s spent $7.5 billion on research for the year, and is on track to outpace last year’s spend, according to its earnings statement.”

“Apple can’t possibly be spending all that money on making the iPhone a little thinner, or making a slightly better pencil for the iPad,” Murphy writes. “But, other than speculations and rumors, there hasn’t been proof that the company is working on much beyond its existing product lines—until now. Answering a question from an analyst on the earnings call, Cook explained the company’s strategy behind its ballooning spending on research and development. ‘On the R&D growth, we do continue to invest significantly,’ Cook said, adding: ‘The balance of the company, we’re managing more flattish from a year-over-year point of view. The products that are in R&D, there is quite a bit of investment in there for products and services that are not currently shifting or derivations of what is currently shipping. And so I don’t want to talk about the exact split of it. But you can look at the growth rate and conclude that there’s a lot of stuff that we’re doing beyond the current products.'”

“Apple is now spending more on research than most major car companies,” Murphy writes. “Apple hasn’t really given us any indication of what its future holds, or how it’s spending its research budget. That’s not Apple’s style. But the sheer amount of money in question gives some credence to the more fanciful rumors and reports on what the company’s up to.”

Read more in the full article here.

MacDailyNews Take: One thing’s for sure, if Apple’s Car doesn’t fly, much less fly itself, the naysayers will be proclaiming Apple’s doom from the rooftops of CNBC et al.

22 Comments

  1. “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”
    Steve Jobs, Fortune Interview, 1998.

    You can’t buy success Tim Cook. And what you’re doing is just what Sculley did. Let’s see if you can produce something.

          1. Well, then, Apple had better spend their money wisely. Simply throwing money at a problem or funding ill conceived ideas is not likely to benefit Apple in the long run. Hiring the wrong people will also not make Apple better, either.

    1. Tim Cook was a disciple and colleague of Steve Jobs, so of course he “gets it”. There’s no indication that he’s buying success in the sense that you mean. But Steve Jobs’ comment in no way precludes spending big money, as long as the focus remains on people – and smarts. And Apple back then was a tiny company compared to today.

      1. First, there is no evidence that Tim Cook “gets it”. As Jobs stated in his autobiography, that Tim Cook isn’t a “product guy”. This was Jobs’s one big worry about Cook.

        Second, what Cook is doing is exactly what Sculley did: progressively higher and higher spend on R&D with little new successful products to show for it. Sculley ended up nearly bankrupting Apple. We have evidence (albeit a bit weak), that the Apple Car is behind schedule, top people have left, and now Bob Mansfield has been brought in to run things.

        We have products that no longer get updated each year (Apple Watch), showing slowing innovation.

        Cook does not have ONE SINGLE SUCCESSFUL new product. He is riding the coattails of Steve Jobs: the iPhone is over half of Apple’s entire revenue and major profit driver, a product Jobs ushered in. Apple’s Other Category which includes Apple Watch is down significantly.

        What Jobs showed is how precise things could be: some of the lowest R&D spend with incredibly successful, massively profitable products that spun out.

  2. Correction?:

    ‘The products that are in R&D, there is quite a bit of investment in there for products and services that are not currently SHIPPING or derivations of what is currently shipping. And so I don’t want to talk about the exact split of it. But you can look at the growth rate and conclude that there’s a lot of stuff that we’re doing beyond the current products.’”

  3. I recall that microsoft spent tons of money on research and we all see what they do. Apple has many projects that never see the light of day. Steve Jobs himself was proud of the things that didnt ship. Dont kid yourself that there are tons of great prototype products in apple labs just waiting for a greenlight. What counts is what ships. Bought a 2016 design macbook pro lately?

  4. I sure hope Apple VP’s don’t get distracted on new projects and let Apple’s bread and butter projects fall to far behind. Eddy Cue already has shown he can’t handle the systems he in charge of now.

  5. Adding to MDN’s take: We really could be at the dawn of a revolution in transportation. This first example is an electric powered plane. It offers vertical takeoff and landing. They say this will be available in 2018.

    This second vehicle is a plane and an automobile. This concept has electric motors and a 300 hp engine. It also can vertically takeoff and land.

    This makes one wonder about the noises coming out of Apple’s “car” R&D labs. Are the noises ducted fans?

  6. Cook’s promises are vapid and directionless. He says things in the manner that Ballmer, Sculley, and the last head of HP did: “All we have to do is invest in the great people we have.” It’s all very PC and syrupy but it historically never leads to breakthrough products, just incremental derivatives, malaise, or utter flops. Steve Jobs’ strength was having a strong vision of where he was taking Apple and saying “NO!” to everything else. It wasn’t PC and hurt a ton of people who labor under the illusion they are truly great. He spent almost nothing on R&D.

    IE:
    – THe Magic Mouse came about because Steve saw nothing in their R&D creations that impressed him. He picked up an unfinished prototype and said “No buttons! This is great!” The gobsmacked technicians then had to figure out how to make one. Steve demanded better.
    – iDVD came about because Steve was *intolerant* of his futsing video editing “experts” during a demo. He stood up and declared loudly “No, No, No! This is what has to happen (Dragged film footage onto DVD icon) Done!” The techs balked and said “That’s impossible!” so Steve walked out. Later as the techs were blowing off steam over beers one of them snided “To do that, the DVD would already have to be made” and DING the lightbulb for a template was born. The result was award winning. It bled immediately into everything else including web design, which ironically Apple overlooked until far too late. It came about because Steve wasn’t nice to them and *demanded* better.

    There are far more examples, but those who change the future don’t create warm fuzzies around them and just support “greatness”. They are more likely to tell Greenpeace to “Go pound sand” than give them a dime, and tell a million dollar designer to get his shit together than pat him on the back. These things do not describe Cook.

  7. Cook was picked directly by Steve Jobs. He has added 10x the profits since he took over. He has a great team lead by Jony Ives. They are always looking towards the future way before you even know they are. What products have flopped?
    None, not even the Apple Watch. It took over 75% of the market the day it was released and nothing can touch it. iDVD? You are talking 90’s stuff that Apple doesn’t use anymore. How do you get innovation without R&D? You can’t build something that doesn’t exist without going out and getting the materials or breaking new ground by developing materials to build that next product with. That’s what R&D does hello.

    1. Well just to pick a nit here, you can get innovation without R&D by acquiring it. That’s how Apple got iDVD. Apple M&A bought Astarte. Apple didn’t write that (although they did a lot of work after the acquisition to turn it into an Apple product). Same thing with Mac OS X, iTunes, Final Cut Pro, LiveType, Shake, Color, Core Image, Firewire, Maps, Siri, iBooks, Beats, and on and on.

      But back to the point, Apple did as much acquisition under Jobs as it does under Cook. One big difference is that now they have to acquire overseas because of their foreign cash hoard that’s too expensive to repatriate. But still, what’s going on with the huge R&D? I’m dying to know. I’m thinking they may just have recategorized as R&D certain expenses that earlier might have been lumped into a product category. Like iCloud servers or investments in overseas manufacturer retooling. Who knows.

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