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

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.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

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.

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