Innovation

Apple's R&D bill set to top 10 billion in 2016, hinting at 'largest pivot yet'

How do you know when Apple has a big "one more thing" up its sleeve? R&D spending increases.

Written by Adrian Kingsley-Hughes, Contributing Writer on May 12, 2016

Apple's R&D bill set to top 10 billion in 2016 — Apple Store, Fifth Avenue, NY
Apple

Apple has been pouring money into R&D over the past few years, and the bill is estimated to top $10 billion this year. Assuming that this isn't all being blown on the Apple Watch 2, it suggests that the Cupertino giant is planning its "largest pivot yet."

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"Apple is now on track to spend more than $10 billion on R&D in 2016, up nearly 30 percent from 2015 and ahead of even my aggressive estimate," writes Apple watcher Neil Cybart. "This is a remarkable feat considering that Apple was spending a little over $3 billion per year on R&D just four years ago."

And next year this R&D bill is expected to top 12 billion.

To further put this into perspective, back in 2007 when the iPhone was launched, Apple's R&D spending was under $800 million a year, growing to just under $1.8 billion in 2010 when the iPad was unveiled.

Cybart also notes how Apple's R&D spending is now outpacing revenue growth, which is down to both increased spending and slowing revenue growth.

So, what's Apple got up its sleeve? Cybert outlines three possibilities:

Apple's expanded product line requires additional R&D - iPhone, iPad, Apple Watch, Macs, iOS, OS X... it all adds up
Apple plans on doing more - so more hardware, software and services
Apple is looking to pivot - In other words, the company is "moving well beyond its comfort zone of selling pieces of glass" and pouring money into "a few big bets"

Of these three options, Cybart thinks that the pivot is the one that makes the most sense, and he thinks this will be in one of two areas: wearables and personal transport.

"In reality, people are grossly underestimating the odds that Project Titan will lead to Apple actually shipping an electric car. At this point, I peg odds of Apple selling its own electric car to be at least 80 percent."

Those are some pretty good odds.