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  • Apple Spends a Fraction of its Revenue on R&D Spending Compared to Others


    The Cupertino California company spent 8.1 billion of its 2015 revenues on research and development, a number which clocks in at just 3.5%. Apple’s R&D expenditure is proportionately far less than that of its peers such as Google and Facebook. According to Bloomberg, Qualcomm and Facebook spent 22% and 21% on R&D in their 2015 fiscal years. Even Alphabet, which is Googles parent company, spent 15%, targeting not just Web and mobile endeavors but projects such as self-driving vehicles and extending human life.

    Apple did seem to reap far more revenue that the other companies though, pulling in over $233 billion, whereas even Alphabet only took in $66 billion comparatively. The Cupertino California company seems to stretch its budget by relying heavily on advances from suppliers according to a business school professor at Temple University in Philadelphia. The value of the company’s contracts is said to encourage suppliers to put forward their own best technology.

    The 2015 R&D budget for Apple was up from $6 billion in 2014 and $4.5 billion in 2013. Some of this presumably went into technologies such as the Apple Watch and its A9-series chips, along with projects that are still extremely secretive such as Project Titan – the rumored electric car project. Apple separately ended up spending another $11.2 billion on capital equipment expenses such as manufacturing tools and its new Cupertino headquarters. This number is expected to reach $15 billion in 2016 and may go much higher as Apple’s car approaches a rumored 2019/2020 launch.

    We’ll have to just wait and see how things turn out.

    Source: Bloomberg via AppleInsider
    This article was originally published in forum thread: Apple Spends a Fraction of its Revenue on R&D Spending Compared to Others started by Akshay Masand View original post
    Comments 4 Comments
    1. RyoSaeba's Avatar
      RyoSaeba -
      Wait a minute. This is highly misleading since you are listing in percentages. The only one that is really spending more is Google.

      Apple 223b * 3.5% = 8.1b
      Google 66b * 15% = 9.9b
      Qualcomm 25.3b * 22% = 5.5b
      Facebook 12.5b * 21% = 2.6b

      There are so many hidden variables that is not mentioned as well. The quality of their R&D department can affect the outcome of their spending. i.e. Having someone figuring out how to do something in 2 weeks vs 2 months can save you a lot of money because many other department may be dependent on that to continue their work. It just goes to show that Apple is doing better, more efficient R&D then the rest since they are able to bank on their investment greatly.

      Why is there a need to spend more when what they are spending now is getting the job done? Just doesn't make any sense.
    1. Oniszczak's Avatar
      Oniszczak -
      I agree that they ARE doing enough R&D - 8.1 billion dollars is nothing to sneeze at. The problem is that the ideas are no longer curated through Steve Jobs so that great ideas are voted down while boring and lazy ideas like copying Microsoft Surface's keyboard and pen get the green light instead.

      Sure, if the goal is to maximize profits in the short term, they are doing enough to get that done. But I see their decline in innovation and gradual reduction in the usability of their products as a sign that history will repeat and we will see the same thing happen to Apple as the last time Steve Jobs left for a dozen years. Maybe they can bring Woz back to save the day when they bankrupt themselves 10 years from now
    1. repoman16's Avatar
      repoman16 -
      Quote Originally Posted by Oniszczak View Post
      I agree that they ARE doing enough R&D - 8.1 billion dollars is nothing to sneeze at. The problem is that the ideas are no longer curated through Steve Jobs so that great ideas are voted down while boring and lazy ideas like copying Microsoft Surface's keyboard and pen get the green light instead.

      Sure, if the goal is to maximize profits in the short term, they are doing enough to get that done. But I see their decline in innovation and gradual reduction in the usability of their products as a sign that history will repeat and we will see the same thing happen to Apple as the last time Steve Jobs left for a dozen years. Maybe they can bring Woz back to save the day when they bankrupt themselves 10 years from now
      Apple doesn't innovate anymore. That is what their competitors are for. They take what people like that are currently on the market, and then make it better by putting more money into a similar product, or just flat out buy the copyrights. Just my opinion.
    1. RyoSaeba's Avatar
      RyoSaeba -
      Quote Originally Posted by repoman16 View Post
      Apple doesn't innovate anymore. That is what their competitors are for. They take what people like that are currently on the market, and then make it better by putting more money into a similar product, or just flat out buy the copyrights. Just my opinion.
      And what's wrong with that? Apple has always been about re-inventing the past. And I'm so glad they did and still do. Let's take this finger print reader for example. Before Apple, finger print readers on phones was a gimmick at best. It's slow, unreliable, and no one really uses it. If Apple didn't came along ands reinvented it, we would still be stuck using pass codes or connect the dots to unlock our phones.

      Let's face it. It's not really about the inventions any more. It's about execution. It's useless to create something but can't really use it without effort. The small companies that got bought by Apple would still be stuck staying small if Apple didn't buy them. And those companies, they could of said no, but I'm glad they didn't.