Apple's R&D expenditure

[maflynn]

There's been some discussion about Apple's innovation and/or Tim Cook being the right fit for Apple.

I saw this article on TAUW and thought it was an interesting read.

I'm not trying to cherry pick certain points to fit my supposition but I did want to highlight one area

As a final point of interest, a recent European Union R&D spending report found that 45 companies across the globe spent more on R&D in 2013 than Apple did. Note that Samsung in this regard checks in at number two on the list, followed closely by Microsoft and Intel.

Its hard to innovate anything if you're not spending the money to finance such innovation.

To be fair I'm not saying apple isn't spending any money on R&D The attached graph from the article shows clearly they've increased spending over the years as they've grown.


My issue is however their competitors such as Samsung and Microsoft are number 1 and 2 in the spending the most money and Google is number 13.

 

[BaldiMac]

No offense, but I think you are cherry picking certain points to fit your supposition.

Spending more money on R&D does not equal innovation. As evidenced by the fact that Apple came up with their most popular innovations while spending much less money on R&D than companies like Samsung and Microsoft.

For example, in 2006 (right before the iPhone), Microsoft spent more than 9x the amount Apple spent on R&D.
http://www.statista.com/statistics/...d-spending-of-top-software-companies-in-2006/

Also, companies like Samsung are much, much less focused than Apple. So R&D spending is spread out among many more different products and categories. (I'd imagine that a great deal of their R&D is spent on semiconductors and displays.)

 

[maflynn]

Spending more money on R&D does not equal innovation. As evidenced by the fact that Apple came up with their most popular innovations while spending much less money on R&D than companies like Samsung and Microsoft.

I see you're point but I also will contend that with such fierce and increased competition Apple needs to step up its game, Its competitors are beating them to the punch on products. Samsung's galaxy wear, Google's chromecast and google glasses. While I'm not saying Apple should have come out with something like google glasses, clearly Google is trying but we've not seen anything from apple, except empty promises from Tim Cook for a couple of years. I take the very lack of product innovation due to the amount of money they're not spending.

I will say the MacPro is one shining star, its very innovative and I think Apple did a great job with that.

 

[BaldiMac]

I see you're point but I also will contend that with such fierce and increased competition Apple needs to step up its game, Its competitors are beating them to the punch on products. Samsung's galaxy wear, Google's chromecast and google glasses. While I'm not saying Apple should have come out with something like google glasses, clearly Google is trying but we've not seen anything from apple, except empty promises from Tim Cook for a couple of years. I take the very lack of product innovation due to the amount of money they're not spending.

I will say the MacPro is one shining star, its very innovative and I think Apple did a great job with that.

Except none of those products that you used as examples are successful examples of innovation. If Apple released any of them, they would be considered massive failures.

It all comes back to the same thing that's been repeated over and over again. If you want to see if Apple is still able to innovate into a new product category, you have to wait until they release a product in a new product category.

Apple develops products behind closed doors. Google does it out in the open. Samsung innovates spectacularly in components such as semiconductors and displays, but products such as the Galaxy Gear are simply beta products sold to the public so they can say they got there before Apple.

Three different strategies. But the whole "Apple isn't innovating because I can't see it" meme is pretty silly.

 

[gnasher729]

Except none of those products that you used as examples are successful examples of innovation. If Apple released any of them, they would be considered massive failures.

Voted you up for this one.

Also, companies like Samsung are much, much less focused than Apple.

Like spending R&D money on freezers, vacuum cleaners, TVs, printers, cameras...

 

[maflynn]

Three different strategies. But the whole "Apple isn't innovating because I can't see it" meme is pretty silly.

The problem though is that they're not releasing products, call it behind close doors all you want, MS, Google and Samsung are spending more and producing more. There is a correlation to how much you spend and how much you innovate. True apple has had some great successes with innovation thanks to Steve Jobs and is his vision but he's no longer there.

I think chromecast would have been successful if apple as able to have an iOS version of this.

I also disagree with the sentiment that it would have been massive failures if apple released google glasses as well.

 

[rdowns]

I see you're point but I also will contend that with such fierce and increased competition Apple needs to step up its game, Its competitors are beating them to the punch on products. Samsung's galaxy wear, Google's chromecast and google glasses. While I'm not saying Apple should have come out with something like google glasses, clearly Google is trying but we've not seen anything from apple, except empty promises from Tim Cook for a couple of years. I take the very lack of product innovation due to the amount of money they're not spending.

I will say the MacPro is one shining star, its very innovative and I think Apple did a great job with that.

Apple has never been about being first. Clearly the watch they are working on is nothing at all like that pice of crap Samsung released. How did that R&D spending work for them?

Chromecast? Great little product but quite limited. Let's not forget the R&D backed Google TV (predecessor to Chromecast) that flopped. Why would Apple want to make a product like this as they have their Apple TV?

Apple beats to their own drum; they always have. They get a lot of criticism for it yet they win more than they lose.

With all the cash they have, if they needed to be spending more on R&D, they would.

 

[roadbloc]

At a guess I'd say they may be entering into some new product categories in the near future. They can't be spending all that money in R&D for just iOS and OS X devices.

 

[BaldiMac]

The problem though is that they're not releasing products,

Why is that a problem? They've always been a very focused company since Jobs returned. Since the release of the iPod, they've averaged a new product category every 4.5 years and done very well.

call it behind close doors all you want, MS, Google and Samsung are spending more and producing more.

Producing more? More what? Again, all of the products that you mentioned are failures by Apple standards. "Hobbies" at best.

There is a correlation to how much you spend and how much you innovate.

Source? Again, I provided evidence that Microsoft's R&D spending dwarfed Apple's last decade. Which was the more innovative company?

True apple has had some great successes with innovation thanks to Steve Jobs and is his vision but he's no longer there.

And we have yet to see what Apple can do without him. Which is why I suggested waiting to judge them until they release a product in a new category. The fact that Google and Samsung are willing to release products before they are ready does not make them more innovative.

I think chromecast would have been successful if apple as able to have an iOS version of this.

They do. It's called Apple TV. Chromecast is simply a cheap version limited to a subset of Airplay functionality.

I also disagree with the sentiment that it would have been massive failures if apple released google glasses as well.

How many have been sold? How much money has Google made on them?

 

[vvswarup]

Steve Jobs reportedly once said something to the effect that if making great products and innovating were as simple as writing a check, Microsoft would be the most successful company out there.

Apple has always been very secretive about its R&D. The only time we see a product from Apple is when they are convinced it's ready to be in the hands of a customer. This approach is in contrast to the approach that Samsung, Google, MS and others take. We've been hearing for years about self-driving cars, Google Glass, and recently, the smart contact lens. But these products are years away from being in the hands of a customer. Everyone knows that, but the fact that said companies openly advertise what they're working on gives the impression of being active in R&D. Regrettably, the media likes to contrast that with Apple's approach of complete secrecy to fuel the idea that Apple isn't innovative anymore, which gives rise to armchair CEOs giving suggestions such as spending more on R&D.

 

[Crosscreek]

I can tell you how Apple saves money on R&d is like a lot of companies do. They watch those tech start up companies and who they may be talking to and wait until the technology matures enough and goes in and snaps them up before the other companies they may be talking with. Then they stash them behind those locked doors until it time to release it. It's much cheaper than developing yourself.

 

[Gav2k]

Op that report is like comparing apples and house bricks!!

 

[benzslrpee]

absolute dollar value does not tell you much. apply R&D-to- sales / profit / cash flow and benchmark across peers... Apple should have an unusually high ratio in comparison. then look at capital investments in the same period duration across peers. there should be some correlation here.

if a company has massive amounts of R&D for future products and / or technology, there should be an uptick in investment as some point. the logic here being something the company is R&D-ing has turned into a business opportunity worth investing in.

if the opposite is true, then you should ask what the hell they are spending R&D money on? albeit, there are a few industries where R&D outpaces investments by a huge amount (e.g. pharma, pure software company)

this should give a quick determination as to the R&D efficiency of the consumer technology companies.