Apple spends over $11.6m on R&D every day, but on what?

Apple spends over $11.6m on R&D every day, but on what?

Summary: Apple is spending about $11.6 million per day on research and development, but what on? Here's what Apple might have coming down the pipeline.

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TOPICS: Apple, iOS, iPhone, iPad
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Apple's financial reports are a treasure trove of information, and it gives us a peek inside one of the most secretive technology companies. Contained in the data is information on the company's spending on research and development, and it seems that the Cupertino giant has been pouring a lot of extra dollars into R&D.

Over the first two quarters of its fiscal year, Apple has ploughed some $2.1 billion into its R&D budget, or some $11.6 million per day, or about 2 percent of net sales. This is a significant increase over the $1.6 billion spend during the same period last year, and at this rate, Apple could put as much as $4 billion into R&D over the course of this fiscal year. This is dwarfed by Microsoft, which is currently investing almost $10 billion a year in R&D, but it is a massive increase from 2007, when Apple's R&D spending was less than $850 million.

According to Apple's quarterly report, the company believes "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", and that it "expects to make further investments in R&D to remain competitive".

But what is Apple working on? During the investor's conference call that accompanied the release of the quarterly figures, Apple CEO Tim Cook said that "really great stuff" will be introduced "in the fall and across all of 2014".

Some of this "really great stuff" is obvious, consisting of things such as:

  • iOS 7: Which is likely to bring with it a revamped user interface and possibly new features to put it on par with — and perhaps allowing it to overtake — Android. We can expect a preview of this at the Apple Worldwide Developers Conference 2013 in June

  • iPhone 5S/iPhone 6: Apple's revenues are heavily reliant on the iPhone, with this single flagship product pulling in $22.9 billion last quarter. Apple can't afford to drop the ball here

  • iPad 5: Yes, we know that's coming too. Again, this single product line generated almost $9 billion last quarter

  • Updated OS X: With so much focus on iOS, iPhones, and iPads, it is easy to overlook Apple's other operating system. While there's no doubt that Mac sales have stalled — or plateaued, feel free to choose which word you prefer — the Mac line continues to be important to Apple. Expect refreshes of notebook and desktop lines.

With the obvious stuff out of the way, let's look at what else Apple might have in the pipeline.

  • iWatch: There's been a lot of chatter about this lately, and if rumors are to be believed ever other company is working on a smartwatch. If Apple plays its cards right, one analyst estimates that this could be worth some $6 billion to the company

  • Apple TV: This is a product that analysts have been claiming will "launch imminently" for so long that it's sort of fallen off the radar. Could Apple surprise us by launching a TV?

  • iPhone mini: Having made the iPhone bigger, pundits now want Apple to make a smaller one, proving you can't please everyone all the time

  • iRadio: A streaming music service is conspicuously missing from Apple's music offering. Rumor has it that Apple could be preparing to fill this gap

  • Streaming TV: There have been a lot of rumors that Apple is trying to corral TV networks into offering shows for streaming on iTunes. Expanding the content on offer through iTunes could help further cement the Apple ecosystem and pull in additional revenue

  • New set-top box: This could shove aside the Apple TV and act as a conduit for new content.

Topics: Apple, iOS, iPhone, iPad

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27 comments
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  • Speculations...

    Many of these ideas are terrible. Apple is and will remain and luxury brand. So then you wrote an article telling us Apple is spending $11 million a day prepping for updates to existing goods with a few departments desperately trying to find the next big thing. Of course, this needs to be a product with a 30% margin, cheap enough that people will buy a "luxury" brand, and "cool". Let's be honest... The iPod spurred the iPhone spurred the iPad. Apple isn't selling a TV (touch on TV = fail). The markets they have always entered have been "good ideas" that haven't hit the mainstream. Suffice to say, the mainstream has or has evolved from all the new devices you have mentioned. The question then becomes, what's a slowly growing market that hasn't hit mainstream. If you say a watch- you drink too much koolaid. Samsung and Microsoft are wasting money working on a smarteatch, too. Perhaps that is Apple's plan though.
    ikissfutebol
    • Um, the whole point of R&D is to throw stuff at the wall

      and see what sticks. It's a place for people to think of and try out the really wacky stuff. Microsoft's R&D is no different.
      baggins_z
  • Research And Development on

    how to sue people/companies?
    wolfn11
    • No, R & D...

      ... on how to make these comments (and commentors) focused on the topic and not on inane comments. It would be worth it...
      earljgray
      • R & D ---Research

        I know a large amount of money was spent and will continue to be spent on Patent lawsuit research and the nearly daily Patent for common everyday task "with a smartphone". It is a core Apple business practice and this cost does fall under Research because that is what it is. I am sure they paid some law firm millions of dollars to research the cost/benefits of suing Samsung. I wish they would invent new tech and stop trying to stop everyone else.
        alex_darkness
        • You know this do you

          You know this do you? Work there did you?
          Sure you know this....then u must also know that MM is currently suing MS and Apple and Google threatened to sue ASUS. U would also know that Samsung is currently suing LG amongst others. I guess they all must be researching patent laws. Ho hum...another day another troll.
          global.philosopher
  • Keep Dreaming

    iWatch - Maybe
    Apple iTV - No
    iPhone Mini - Never
    iRadio - Didn't iTunes have radio streaming built in?
    Streaming TV - That is what apps are for
    New set top box - See Apple TV
    Dreyer Smit
  • Incorrect. Mac/OSX are no longer important to apple.

    They'll give them lipservice in hopes of milking them for another 3-4 years but they are not at all important to apple any longer. They are struggling to find most cosmetic for least work features to create a short term facade of still caring. Thats all. If you work in one of those groups you should be looking for the next phase of your career. They got a brief lift from the consumer side popularity of the idevices but that's gone and fading with idevice market share. Now that apple has realized that it's competitors have leap frogged it much more quickly than it thought they would and it needs to focus on the ithings or they too will fade it's going to be all guns on the ithings.
    Johnny Vegas
  • BUT BUT BUT...

    Forbes told me Apple doesn't spend money on R&D! Forbes would never lie!
    His_Shadow
    • Apple has spent money on R&D for most of it's life

      Back in the 80's and 90's they spent more money on R&D than any other PC company. They did more than simply assemble components, unlike Compaq and Gateway in the same time period. Who's alive today? Compaq and Gateway are merely bargain brands owned by other companies today.
      Who made MP3 players, smartphone and tablets popular and profitable? And now look at all the me too folks!
      GoPower
      • So what you're saying is that

        it doesn't matter what Apple spend R&D money on, as long as they spend the money?

        "Back in the 80's and 90's they spent more money on R&D than any other PC company"

        Do you have a link to that, as I heard very differently.
        William Farrel
  • Common sense is the least common of all senses

    I wonder how much it costed to Apple to came up with what the competition call obvious design elements. Obvious design elements only looks obvious after you discover them. As my grandmother use to say common sense is the least common of all senses.
    jigzat
    • Yep, agreed

      I remember when Apple went to Motirolla for them to design an Apple phone...what a dog....I guess it wasn't so obvious to Moto.
      I remember Samsungs phones at the time....wasn't so obvious to them either.
      Sometimes it is only obvious when it is shown to them. Thank god for Samsung that they are able to capitalizing on Apples R&D. To bad for Moto who still can't hit a home run.
      global.philosopher
  • R&D

    all the while Microsoft is spending $22 million per day on Research and Development...Sounds like Apple needs to step it up.
    hafenbrack
    • Don't know about that. Apple's had some pretty

      big hits off that budget.
      baggins_z
      • You gotta be kidding! Apple thought they could coast forever with their

        iDevices, and then!!!, the competition outdid them, by spending more to develop better products, and the iDevices were left behind. Yeah, the iDevices are still making boatloads of money for Apple, but, they know that they're in danger of becoming stale and old and has-beens.

        Apple had better spend a few more billions in R&D, and devices alone won't get them to the next level, that being a company that doesn't just depend on cool-looking devices. They need to diversify, even if it means acquiring/purchasing their next set of products and services. Sometimes, research is overblown, especially when the research has been done by others, and simply acquiring "them" is easier and sometimes cheaper.
        adornoe
        • Luck Apple

          If they are currently coasting then the future looks bright for them then. Some people say Apple is failing...if that is the case then the future looks even brighter. Not too many companies can do this well while failing or coasting.
          Every company should take a step back now and then and reflect on future direction. If that is what Apple is doing then can't wait till they step it up again.
          global.philosopher
          • It's about preparing for the future, you ninny!

            Apple might be doing good or great at the moment, but things can't be expected to always remain the same.

            So, Apple had better be preparing for the future, because iPhones and iPads won't continue to produce as great as they have in the past.

            Those who fail to prepare for the future, because they are content with the present, will be in for a very rude awakening.

            The fact remains that, Apple has been coasting for the past 3 years, and tweaking their products in order to create a "new" product release, is still coasting with the "same" product line.
            adornoe
        • Re: they're in danger of becoming stale

          And " Yeah, the iDevices are still making boatloads of money for Apple, but, they know that they're in danger of becoming stale and old and has-beens. "

          When you go buy a brand new car, you know for sure it will get scratches in a day and eventually break down, no matter what you do. You still do buy th enew car, right?
          When you are born, everyone around you know you will one day die. While you are young, you are told things about your future you don't like, yet you enjoy life. You don't give up.

          Why would Apple do any different? What if iDevices continue to bring them as much or more money in the next decade? If you were Apple with such prospects, would you just junk all of your bussiness, "because one day it might be no more"?

          I would not worry much about Apple.
          danbi
          • It's about preparing for the future, you ninny!

            Apple might be doing good or great at the moment, but things can't be expected to always remain the same.

            So, Apple had better be preparing for the future, because iPhones and iPads won't continue to produce as great as they have in the past.

            Those who fail to prepare for the future, because they are content with the present, will be in for a very rude awakening.
            adornoe