Apple boosts R&D spend, now 3 percent of revenue

Apple boosts R&D spend, now 3 percent of revenue

Summary: Apple, in search of new product categories, has boosted its R&D spending 33 percent for the six months ending March 31.

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TOPICS: Apple, Emerging Tech
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Apple is increasing its research and development spending and is now at 3 percent of revenue compared to 2 percent in recent years.

The R&D spending was detailed in Apple's quarterly 10-Q filing with the Securities and Exchange Commission. As Apple's sales have ramped, the company hasn't been able to increase its R&D spending. As a result, Apple's R&D spending as a percentage of revenue was in line with what Dell and Hewlett-Packard spend.

Apple CEO Tim Cook obviously sees the discrepancy. He should since Cook was a former IBMer. IBM keeps its R&D spending at 6 percent of sales hell or high water.

Also: Apple fans face a big iWait on new product categories, services | Apple's Cook: Product launches more about 2014

Specifically, Apple spent $1.12 billion on R&D for the three months ended March 30, up from $841 million the year before. For the six months ending March 30, Apple's R&D spending is up 33 percent from a year ago. Apple's Cook had mentioned new content and services going forward. Apple also shook up its management team last year and Bob Mansfield was tasked with developing the company's chip and networking technologies. 

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Regarding R&D spending, Apple said:

R&D expense increased $278 million or 33% during the second quarter of 2013 compared to the second quarter of 2012 and increased $530 million or 33% during the first six months of 2013 compared to the same period in 2012. These increases were primarily due to an increase in headcount and related expenses to support expanded R&D activities.

The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company’s core business strategy. As such, the Company expects to make further investments in R&D to remain competitive.

As a percentage of sales, Apple's R&D spending could be higher, but it is certainly a step in the right direction.

Previously: Apple's R&D spending hits bottom as percentage of revenue

Topics: Apple, Emerging Tech

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7 comments
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  • Misleading statistics

    Apple spent billions last year on R&D, Dell spent $860 million, yet Dell devoted a higher percentage of revenue. Well, since Apple's revenue is significantly higher, they don't need to use the same percentage, so comparing percentages is very misleading.

    Also, as we all know in this day and age of graft and corruption (Pentagon spending $300 on a hammer) we know that some companies spend money wisely and efficiently and some blow it.

    So look at results, Apple reinvented the phone and tablet market these past few years, and I'm sure they have stuff in the pipeline just as trailblazing. While other companies blow through mor money, with less to show for it.

    Look at MS, wastes billions on a touchscreen the size of a table, while Apple concentrated on putting one in your hand.
    ShazAmerica
  • RE: MS waste

    I agree about the surface table thing being a waste, although it would be useful in 2 niche fields: restaurants & casinos. The surface table could serve as a virtual waiter/waitress with an automated menu w/tip already included. The same goes for casinos, a group can sit at the table and play various card games with a virtual dealer plus order food & drinks directly from the table.I remember reading that just placing your credit card on the table can be used as payment.

    MS had a pocket PC with touch enabled that allowed users that ability to access everything in their hand long before the iphone. MS also created the tablet genre long before the ipad and nobody cared at the time. MS created zune as a ipod ripoff, when it was obvious they should have made it a phone at launch thus pre-dating the iphone. Had MS had the foresight to make the zune a phone at launch, MS may be seen differently today in the mobile space.
    step69
    • Why do you need a tablet that big to do this?

      Why would I want to sit in a casino to talk to a tablet when I can do that at home? Why can't I just use my device instead of yours to be a virutal waiter? Will you order real food from this virtual waiter, or will you expect a real person to make it and bring it to you? or are you toing to get it yourself, in which case why not stay home and talk to your family members over the dinner table instead of being assaulted by TV and loud music in a restaurant?
      Realist2199
      • Shouldn't your handle be 'Realist 1899? You are so far behind the times.

        Fine, you don't want to sit in a casino? You don't have to. Maybe you could go to your favorite bar instead; that's the place where they have the loud music and loads of TV screens. Why waste the time to summon a bartender over, place your order, make them go back to the bar and get the drink, only to make the round trip over again to drop off your drinks? Tap what you want into the 'Surface' tabletop and the barhop only makes one trip instead of two. Want a tab? The table keeps up with that, too.

        Or maybe you want just a nice, quiet restaurant with your family? As soon as you sit down, you order your sodas, tea and coffee without having to wait for someone to come ask and--again--make that round trip. In fact, with your own tablet maybe you have already placed your order even before you arrived--having it acknowledged and submitted to the kitchen on your arrival. The possibilities are endless.

        You are right, a realist understands the difference between fact and fiction--they don't go out of their way to imply a fiction is fact.
        Vulpinemac
    • You are absolutely right about Microsoft being first with most tablet tech

      The problem is, first is not always best. In Microsoft's case they didn't follow up the way they should and as such let a great opportunity slip through their fingers. They tried to listen to their customers who 'thought' they knew what they wanted; obviously, both were wrong. As a tablet OS, Windows as it stood was useless. Part of this was due to OEMs not building readily usable tablet PCs--grossly expensive and heavy. Part of this was due to developers flat ignoring the touch overlay that was available that could have made their software so much easier to use. Most of it was Microsoft itself, introducing it and then simply ignoring it rather than pushing, prodding and wrangling every step of the way to make it work RIGHT. This is where Apple beat them.

      Apple saw the failure and as Jobs himself said almost 30 years ago, "People don't know what they want until they see it." Apple made it work right and as such effectively stole the smartphone market away from the established players. Apple made it work right on tablets and flat-out stole it all away--selling more iPads in less than 9 months than all tablet PCs combined since Microsoft's first announcement in 2001.

      So where do we stand with Microsoft today? Well, I believe they learned at least part of their lesson. This time they're pushing for the touch-centric apps. This time they're pushing for the touch-centric hardware. The problem is, their users are pushing back--refusing to accept change because it is 'too different'. Worse, Microsoft is giving-in to that back pressure rather than driving through with their concept--which can only end badly for both parties.

      Apple has shown us the direction personal computing is going. Everyone else now has the chance to move the whole system forward.
      Vulpinemac
  • Surface Pro

    Apple reinvented the phone market several years ago (which I’m glad they did) and has just done incremental updates since then. Well, there is only so much you can do with a cell phone with such a small screen. The so called tablets are nothing but oversize cell phones, so that cannot really be called reinventing the tablet.

    Surface Pro is not a waste. It is a great way to use a portable computer and more convenient than a oversize cell phone. Except for some physically inactive people who think the Surface Pro is to heavy. I’m sure Apple knows that tablets (real tablets) is going to be the way to go, but will wait until Intel comes up with more efficient processors that will not drain the battery.

    I’m sure that is why Microsoft delayed the release of the Office suite for the iOS because how Intel & AMD are making advancements it will make more sense to purchase a tablet than a oversize cell phone.
    lares3k
    • real tablets

      What you think defines an tablet for being "real"?

      Should it have rounded corners, or should it not? Should it have active stylus input, or should it not? Should it have attached keyboard, or should it not? Should it run a "real" OS or should it not. By the way, is there any "unreal OS" out there? Should it do "real work" or should it not? By same measure, is there "unreal work"?
      etc, etc....

      You see, it all makes no sense. You either have a product that people want, in an tablet form factor, like the iPad. Or you have an product in tablet form that people mostly skip, like the Surface. This is "real".
      danbi