Apple ramps up R&D spending in search for their next big product

Rob Marvin for PC Magazine:

Though Apple’s services, wearables, and accessories products are still showing healthy growth, the iPhone has been its cash cow for a decade. As the smartphone market stalls and iPhone sales stagnate, Apple needs a breakthrough technological innovation the likes of which we haven’t seen much of during the Tim Cook era. And the company knows it.

So it’s not surprising that Apple spent a higher percentage of its total sales revenue in Q3 on research and development than it had in any quarter since before the launch of the iPhone. The company spent $4.26 billion on R&D in Q3, or 7.9 percent of its total sales. Overall, Apple has allotted 6.2 percent of its 2019 sales revenue to R&D, its highest percentage since 2003.

MacDailyNews Take: Apple just posted quarterly revenue of $53.8 billion. With a “B.” All without a so-called “breakthrough technological innovation,” putting the above use of the word “needs” in question. For some perspective, Apple could do pretty much nothing and generate north of $280 billion in 2020. Yes, in just 12 months, Apple will generate more revenue than Mastercard, Bank of America, Disney, AT&T, Royal Dutch Shell are each worth.

Who knows whether Apple will surprise us again with a game-changing tech product on the scale of the iPhone? But while the company continues to pour more money into R&D, its services business is slowly turning Apple into not just a device- and software-maker but also a media and entertainment giant, a financial services provider, a gaming platform, and beyond.

MacDailyNews Take: Yes, Apple Glasses, among other product development projects, require increased R&D spending.


  1. How about thinking ecosystems instead of products? Their might be big markets out there around the world, given some innovative thinking. A couple examples – how about the under-served non-consumer market, that is, small businesses, home businesses, startups, developers, etc., who want powerful IT but want to NOT depend on Microsoft, Linux, Big IT and the Cloud? There are A LOT of small businesses in the world. And/or how about an advanced products division aimed at early adopters, power users, developers, small businesses working with ACN consultants, etc. Work with leading edge customers and get their ideas, suggestions, etc. How about some mini towers or expandable, modular systems not as big and expensive as the new Mac Pro? Some type of Mac server that could fill racks at MacStadium, MacMiniColo, or other Mac colocation data centers? How about not degrading macOS Server? How about an inexpensive, fanless network appliance box (like an Apple TV) with fast ethernet ports that could headlessly run some version of macOS and apps like a DNS server? What if a startup business could work with an ACN consultant, go to an Apple Store, buy a truckload of boxes of product, and have their IT up and going in a matter of days? This is just a quick list of some ideas from one person, and I did not even touch mobile products, home automation, etc. – there are probably thousands of other ideas of IT needs that Apple could serve, if Apple would just ask their longtime users.

    1. The problem is turning any of your ideas into a snappy 15 second sound byte of an ad. That seems to be the best they can muster…except for monitoring your heart. They seem to be doing OK on that front as long as the price of the iPhone to go with your iWatch doesn’t give you a heart attack. Have they made any 15 second ads about the heart rate monitor?

    2. One of the top few business principles is, “DO NOT try to be all things to all people”. Apple has had mind-boggling growth over the last two decades. I think they can figure out what is worth implementing. They certainly do so far, far better than Microsoft, Samsung, IBM, Dell and many more.

      1. Yeah, all that mind-boggling growth and yet Microsoft is now worth quite a bit more than Apple and they made it look easy. Microsoft was able to make a smooth transition with the times and even after a major foul-up with their mobile initiative. That Nokia loss could have thrown most companies into chaos but Microsoft came out of it smelling like a rose as investors quickly embraced Microsoft’s cloud business. With Apple, big investors don’t seem to be happy with Apple’s move to Services and are, in fact, lukewarm about it. They still want Apple to sell loads of iPhones and we all know that isn’t going to happen, especially at $1000+ a pop. Apple is painting itself into a high-priced corner.

        The way I see it, Wall Street is betting more of its money on Microsoft than Apple. Honestly, Apple should have had all the advantages when iPhone sales were soaring. I realize all those stock buybacks have allowed Apple to have about three-billion less outstanding shares than Microsoft, so I guess that should be taken into consideration. Its best to think long-term and I have done very well by owning Apple stock since 2004.

        R&D spending doesn’t necessarily translate into great or financially successful products. I think if Apple could only crack non-invasive blood sugar measurement with AppleWatch it could push Apple into a whole new dimension. Health management could theoretically have more growth potential than cloud computing. However, Apple coming up with a solution to non-invasive blood-sugar measuring just doesn’t seem likely to happen. So many health-focused companies have tried and failed.

        At least the new Mac Pro looks like a promising product but only time will tell if that’s successful.

        1. Article: “Apple needs a breakthrough technological innovation the likes of which we haven’t seen much of during the Tim Cook era.”

          Right! And we all know it has not happened under beancounter Cook. Although he has wasted billions of beans on worthless R&D. The watch was sold by Apple since the 1990s and the upgraded smart version started under Steve’s watch no pun intended.

          Their “next big product”?

          We are not reading anything lately on Project Titanic with billions spent and no big product.

          We are not reading anything lately on the AR game changing revolution with billions spent and no big product.

          We are not reading anything lately on TV service to rival all cut the cord competitors with billions spent and no big product.

          What we are indeed reading is billions wasted on R&D, fashionista salaries, dead beat headphones and expensive celebrity TV productions.

          If the next big product is to come from Apple you NEED creative out of the box thinkers like legendary designers Scott Forstall and Jony Ive.

          Oh sorry, BOTH left Apple under Cook’s watch. So, the best to execute the next big product are gone or in limited contract. It is long OVERDUE for Cook to be REPLACED…

    1. That was my idea, too. As an African American, I was inspired by the massive size of my own. It’s a gift I wanted as many people as possible to benefit from.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.