9 ms·

Apple Is Getting More Bang for Its R&D Buck

42 points by bko 11y ago

philip1209 11y ago
These seem like different horizons on investments. Apple seems to be dedicating a lot of resources to projects with 5 year horizons, while Google seems to be dedicating a lot of resources to projects with 20 year horizons. Neither strategy is wrong, but of course you would expect better ROI in a short period than money spent on fundamental research at a (relatively) new company.
- rarepostinlurkr 11y ago
  Technology goes really fast. 20 years is insane, I'm not sure I'd bet a technology business on where we'd be in 20 years. 5 seems risky but worth thinking through. Probably not worth planning for except in the most abstract of ways.
  - philip1209 11y ago
    I agree - but I'd describe things like self-driving cars or curing cancer as fundamental research rather than technology.
jacobolus 11y ago
I wish Apple would spend some more R&D money fixing up their Mac application-level software, which in my opinion has been on a gradual decline since about 2005. More seriously though, Apple’s revenue is much higher than these companies, and their R&D budget is still in the same order of magnitude (larger than Qualcomm or Facebook, about the same size as Google). So the answer here seems to be that they have a more efficient business model or participate in larger markets than Facebook or Qualcomm or Google.
- sithadmin 11y ago
  >So the answer here seems to be that they have a more efficient business model than Facebook or Qualcomm or Google. Or perhaps the sorts of issues they're working on are simply lower-hanging fruit? (no pun intended)
- nier 11y ago
  Would it be rational to assume that even Apple has a hard time coming by quality people and all their A players are already busy laying the ground work for whatever product category they are about to enter next? For example, if that might be a car they will need much better software and that from day one, otherwise people will die. The lack of polish on OS X might be an indication that they are working on something big. Not necessarily big for us, but a huge effort for them.
  - jacobolus 11y ago
    I assume that’s a big part of it. It’s disappointing though, because there are huge possibilities for user interface improvement in systems like file managers, “office” software, web browsers, image/video/audio/&c. tools, developer tools, and so on, for someone willing to invest serious time and money in getting the core abstractions right instead of chasing shiny new small features. It’s depressing that for example the file manager from BeOS is still better than anything we have in current machines, and that the OS X file manager isn’t fundamentally anything but a mashup of the ones from NeXT and from original Mac, with slightly different chrome.
    - derefr 11y ago
      What's stopping a third party from making the software-with-better-core-abstractions you're talking about, and selling it—on the Mac App Store even?
      - jacobolus 11y ago
        In most cases, nothing in particular (the file manager is a bit different, as it needs work at the operating system level). But software projects competing in established markets which require many years of development to catch up to “industry standard” tools are hard to get off the ground, because new untested ideas are risky and there are few short-term payoffs. I would love to see new products competing in all these areas. The one I’m most familiar with, Photoshop-style image editors, is based on core abstractions dating from research done on 1970s graphics workstations with far-too-literal adaptations of darkroom photography practices with 19th century ideas about how color works embedded deeply, and there is huge room for improvement if someone is willing to reimplement everything from scratch on better foundations. It’s a several-year multiple-developer kind of effort though. I’m sorry about Apple in particular because it seemed like their Mac application software teams were on a roll from ~1997–2005, but have sort of stalled since then. (Some of what they’ve done since has been awesome, but overall in my opinion there’s been substantially less great stuff in the past 10 years than in the 8 years before that, and many apps feel severely neglected.) I am thankful that Apple (with help from Qualcomm, Samsung, Intel, etc.) keeps pushing the hardware side though. The new stylus, “retina” displays, better battery life in thinner computers and tablets, etc. are wonderful.
- brwnll 11y ago
  Instead of a more efficient business model, I'd offer that it's actually the difference between being a hardware and software company. Being a year or two late in software can often mean you product never has a chance to disrupt the first to market (assuming roughly equal quality product). Contrarily, Apple has shown time and again they can be several generations behind in specific technology (until they can "get it right") and still maintain demand for their products.
- rhino369 11y ago
  Comparing Apple to Qualcomm, Facebook, and Google is a mistake. Apple is a consumer electronics company. Typically consumer electronics companies don't R&D their components. iPhones use Qualcomm baseband chips. Apple does design some of their components, but that's actually atypical for a consumer electronics company. Even then, Apple needs someone like TSMC to fabricate them. So a lot of Apple's revenue goes to buying components of companies that are spending a lot on R&D. Qualcomm is making the components. They are doing the R&D because they have to. TSMC is R&Ding building 14 nm chips. Hynix is creating bigger NAND flash drives. Google and Facebook are different because they sitting on monopolies that print money. They also do much more in house because it's easier to. Apple has some ability to use their size and existing products to capitalize on new technologies. But it's probably better to just return their profits to their stockholders and let the market fund new R&D. Then again a lot of cool tech came from monopolies playing around excess profits (Bell Labs, Xerox, etc.).
  - stcredzero 11y ago
    Then again a lot of cool tech came from monopolies playing around excess profits (Bell Labs, Xerox, etc.). But notoriously, a lot of cool tech that was developed at Bell Labs, Xerox, and Kodak ended up being so severely misunderstood by upper management there that outside companies were the ones to develop and sell products based on the new technology, while efforts to do so in house were practically or actually discouraged. These include such game changers as Object Oriented Programming, WYSIWYG word processing, Graphical User Interfaces, and Digital Cameras. However it happens, Apple is good at taking R&D, no matter where it originally happened, and creates game changing products out of it. One could argue that this is baked into the very DNA of the company. (Two of the oldest examples: Microprocessors ==> Personal Computing, and Graphical User Interfaces.) If you like, think of Apple as the anti-Xerox. It's not the company that spends tons of cash on internal R&D, misunderstands it, then winds up being unable to capitalize on it. It's the company that can take anyone's R&D or idea, understand the essentials of it, then executes great products. Why be the company that invents something, when you can instead be the company that profits from it?
  - robszumski 11y ago
    Apple designs its own microprocessors, numerous sophisticated connectors, extremely small speakers, clicking hardware, touch sensors, metal plating processes, etc. While they partner with folks like Samsung, I don't think its fair to say that they only design "some" components. They are industry leading in many areas, including batteries.
- johnchristopher 11y ago
  What about their margins ? It seems commonly accepted that Apple has much better benefits for every piece of hardware they sell than any other players.
iMuzz 11y ago
Tl;dr: Apple only spends 3.5% of its revenue on R&D versus companies like Google, Qualcomm, and Facebook who spend 15%, 22%, and 21% respectively. (2015 stats)
deleted 11y ago
[deleted]
roymurdock 11y ago
R&D accounting for tech companies should somehow factor in M&A spend as this is becoming the de facto way to "generate" research and IP for large tech companies. > Apple’s relative thriftiness extends to its vaunted advertising and marketing operations. The company spent $3.5 billion on advertising and marketing over the past four quarters, while Google spent about $8.8 billion in the past three. R&D spending isn’t worthwhile if it never leaves the lab, says Tim Swift, a business professor at St. Joseph’s University in Philadelphia. “Apple’s products are going through some of the most effective and sophisticated marketing we’ve ever seen,” he says. “That’s the other half of what makes Apple the most productive R&D spender.” Surprising to see that Apple also spends less than 50% of what Google does in direct advertising. Amazing what kinds of costs you can cut when you have such strong marketing already built into the name, look, and design of your product.
- guyzero 11y ago
  Google's sales and marketing expense category consists of the following items (from their 10K) - some (perhaps most) of it is actually stock comp for sales & marketing employees. • Labor and facilities-related costs for our personnel engaged in sales and marketing, sales support, and certain customer service functions; • Advertising and promotional expenditures related to our products and services; and • Stock-based compensation expense for our employees engaged in sales, sales support, and certain customer service functions.
krallja 11y ago
Thanks for the autoplaying video ad!
cromwellian 11y ago
I read this as "how Apple relies on the R&D of other companies" For example, the quote about how IBM spent 100x as much on R&D as Apple. IBM has produced 6 Nobel prize winners that lead to revolutionary advancements in the industry which Apple "innovation" relies on. There would be no iPhone without the investments in basic research and process that has done been done at IBM, Bell Labs, Intel, et al. When I worked at IBM, I couldn't wait to read the next IBM Systems Journal, it was the only piece of "corporate" internal communications in any company I've ever worked for that I looked forward to. I worked at IBM T.J. Watson in the 90s and one of the things told to us during orientation is that our budget, and our research was separate and independent from the commercial divisions of IBM and we were free to work on stuff that wasn't necessarily commercially viable. Something rubs me the wrong way about this article and Apple's R&D spending. R&D spending is wasteful, it is a gamble, but every once in a while, it produces something incredible that leads to a huge net positive externality for the world. Some of the greatest inventions were done on research no one ever thought would have any commercial usage. These days politicians decry studies on bear DNA, or Shrimps on Treadmills, but who's to say these won't be vitally important things 20 years from now? Part of relying on the research advancements of others, standing on the shoulders of giants, IMHO, is to take your success and your profits, and invest them, continuing a kind of scientific "social contract" for those that come after you. Hoarding profits and bragging about how you can get away with making lots of money without having to hire many researchers is IMHO, a kind of parasitical attitude. On top of that, is the tendency of people to credit Apple for all advancements, even those that were tweaks on hard work done by others. Do I credit Apple for their graphics performance, or Microsoft, AMD, PowerVR, NVidia, SGI, and everyone else who over the past decade have invested massively into consumer 3D acceleration? Do I credit Apple for amazing battery improvements, or Intel or Samsung investments into NAND? Is the A9X more important than TSMC/Intel/Samsung fab innovations? Or IBM's introduction of STM, Magnetic Storage, Eximer Lasers? Science and Innovation are social endeavors relying on a community of shared progress. The secretive way Apple does R&D, their lack of publishing, and the way they promote this 'lone genius/inventor' view of the company rubs me the wrong way. I'm not saying Apple hasn't innovated, especially in mobile software, but won't should brag about not doing basic research, and banking a hundred billion in offshore cash to be used for what, stock buybacks? Just what is wrong with say, spending some of that money to fund research into say, quantum computing or medicine? Does every damn thing have to be applicable to the next iPhone?
mamon 11y ago
TL;DR: 3.5% of $233bln is more than 21% of $12.5bln. Is this just an article about basic math, or am I missing something?
- brwnll 11y ago
  Your missing something. Reading beyond the infographic, the article is really about how Apple is able to offset the need for R&D dollars (which as expanded from $4b in 2013 to $8.5b in 2015) by being an overwhelming large consumer of components ($29b committed next year). This causes the suppliers to invest heavily in R&D to be able to "wow" Apple and lock up big contracts with their innovations, instead of Apple needing to do it directly. The most interesting part to me is if this speaks to a counterpoint of the slow direction Apple appears to be taking moving more and more in house. This appears to indicate there is significant value by keeping key partners separate and in the free market, even with the lessened control of being a 3rd party.
  - derefr 11y ago
    Seen that way, Samsung Electronics is basically an Apple subsidiary kept at arm's length to keep the market forces going.
    - illumen 11y ago
      Apple is a marketing arm of Samsung.
      - tellarin 11y ago
        I see what you did there. "... marketing ARM..." Clever. ;-)
  - throwaway_ghj 11y ago
    No, you're missing something.
drpgq 11y ago
Is whatever was spent on something like buying FaceShift counted as R&D spending?
mark_l_watson 11y ago
Well, their absolute R&D spend seems to be working very well for them! That said, I wish Apple would invest more in their web services. I find iCloud, Siri, etc. to be not as good as services from Google and Microsoft. Because of (at least what I percieve is) Apple's fairly strong stand on the basic human right of privacy, I would probably award them all of by business is their web services were much better. As it is, in addition to Apple gear I also use a Chromebook, Android phone, and even a Windows 10 laptop (I was curious to kick the tires of Windows 10).
- lrem 11y ago
  I'm pretty sure I have read about some pretty strong stands for privacy from both other companies you mentioned too.
  - mark_l_watson 11y ago
    I am a huge fan of Google's services but they do make money from our personal information. I am hopeful that Microsoft will evolve into a strong supporter of privacy, but with some (hopefully temporary) issues with Windows 10, I will wait and see what happens.
    - soylentcola 11y ago
      They make money from personal info but not necessarily in a way that would automatically be considered a violation of privacy. The best way I can think of it is to compare to cable TV. Insert some other service if you've never had or wanted cable TV. Right now I pay something like $40/mo for cable TV and still have to watch something like 15-18 minutes of advertising per hour of programming. The "Google version" of cable TV would either be free or cost a nominal $5/mo subscription and their algorithm would automatically use my viewing history to determine which ads might be applicable to me. As a result, I'd only have to watch a single 5 minute ad segment in the middle of every hour-long program. The better odds of a given ad being applicable would make the ad time more valuable so they wouldn't need to run as many to make the same amount of profit. Likewise, people and companies that want to reach potential customers waste less of their advertising and publicity budget on viewers that would never buy their products. So, gross oversimplification aside, there's "making money from personal info" and there's "using data to make the same money from less advertising than traditional methods". I'm sort of on the fence myself and somewhat playing devil's advocate here but it's something that's often lost in discussions. My main concerns are that government, law enforcement, or criminals would gain access to data that I only agreed to share with one company's algorithms. My main point is that "making money from personal data" can sound a lot like "selling my personal info to god knows who" which I've never known to be the case regarding Google or any of the info that's collected by Microsoft in newer versions of Windows. My main conflict is between two things: a reflexive distrust of the motives of business and an acknowledgement that some really cool things (and plenty of mundane but still good things) only work when you have the data to power them. It's definitely a complex issue and not something I'll solve in an overly-long comment while I waste the last 10 minutes before it's time to go home.
simonh 11y ago
Here's an article by Horace on Aymco in 2012 on this same subject [1]. Back then Apple was spending just north of $600 million a quarter on R&D (in 2011, which is when he had figures for). Since then to reach $8 billion a year, Apple would have had to increase spending by over %30 per year. That's a very impressive ramp up in spending, especially when sustained over a substantial period of time. The thing is their revenue growth has been so spectacular, it's swamped their otherwise dramatic increase in investment in R&D on a proportional basis. [1] http://www.asymco.com/2012/01/30/you-cannot-buy-innovation/ http://www.asymco.com/2012/01/30/you-cannot-buy-innovation/
wrsh07 11y ago
Are acquisitions considered money spent on R&D?
return0 11y ago
That's a polite way to say that apple is spending less on R&D.
- eric_h 11y ago
  They're spending less per dollar of revenue, but the amount they're spending in absolute terms is totally comparable to other big tech companies.
anindyabd 11y ago
I read this as: how successful you are has nothing to do with how innovative you are. The Apple formula: keep innovations at a minimum, but market all your products as the coolest thing that anyone has ever seen anywhere. With enough of a marketing budget, everyone will believe you.
- bcohn91 11y ago
  From the article: > Apple’s relative thriftiness extends to its vaunted advertising and marketing operations. The company spent $3.5 billion on advertising and marketing over the past four quarters, while Google spent about $8.8 billion in the past three.
- s73v3r 11y ago
  Yeah, no. If all they had was marketing, and the products were not actually good, then no one would buy version 2.
- j2bax 11y ago
  The only thing I can assume is that people like you haven't ever really used Apples full line of products and seen how seamless the experience is in comparison to anything else on the market. Or used one phone for 2-3 years and not felt completely crippled in that time. I have rarely used an Android device that didn't feel sluggish.
senthilnayagam 11y ago
apple is not a standalone research company, it is market driven, with its purchasing power for components and tooling budget is making its vendors innovate and that shows up

42 points by bko 11y ago

These seem like different horizons on investments. Apple seems to be dedicating a lot of resources to projects with 5 year horizons, while Google seems to be dedicating a lot of resources to projects with 20 year horizons. Neither strategy is wrong, but of course you would expect better ROI in a short period than money spent on fundamental research at a (relatively) new company.

rarepostinlurkr 11y ago
Technology goes really fast. 20 years is insane, I'm not sure I'd bet a technology business on where we'd be in 20 years. 5 seems risky but worth thinking through. Probably not worth planning for except in the most abstract of ways.
- philip1209 11y ago
  I agree - but I'd describe things like self-driving cars or curing cancer as fundamental research rather than technology.

jacobolus 11y ago

I wish Apple would spend some more R&D money fixing up their Mac application-level software, which in my opinion has been on a gradual decline since about 2005. More seriously though, Apple’s revenue is much higher than these companies, and their R&D budget is still in the same order of magnitude (larger than Qualcomm or Facebook, about the same size as Google). So the answer here seems to be that they have a more efficient business model or participate in larger markets than Facebook or Qualcomm or Google.

sithadmin 11y ago
>So the answer here seems to be that they have a more efficient business model than Facebook or Qualcomm or Google. Or perhaps the sorts of issues they're working on are simply lower-hanging fruit? (no pun intended)
nier 11y ago
Would it be rational to assume that even Apple has a hard time coming by quality people and all their A players are already busy laying the ground work for whatever product category they are about to enter next? For example, if that might be a car they will need much better software and that from day one, otherwise people will die. The lack of polish on OS X might be an indication that they are working on something big. Not necessarily big for us, but a huge effort for them.
- jacobolus 11y ago
  I assume that’s a big part of it. It’s disappointing though, because there are huge possibilities for user interface improvement in systems like file managers, “office” software, web browsers, image/video/audio/&c. tools, developer tools, and so on, for someone willing to invest serious time and money in getting the core abstractions right instead of chasing shiny new small features. It’s depressing that for example the file manager from BeOS is still better than anything we have in current machines, and that the OS X file manager isn’t fundamentally anything but a mashup of the ones from NeXT and from original Mac, with slightly different chrome.
  - derefr 11y ago
    What's stopping a third party from making the software-with-better-core-abstractions you're talking about, and selling it—on the Mac App Store even?
    - jacobolus 11y ago
      In most cases, nothing in particular (the file manager is a bit different, as it needs work at the operating system level). But software projects competing in established markets which require many years of development to catch up to “industry standard” tools are hard to get off the ground, because new untested ideas are risky and there are few short-term payoffs. I would love to see new products competing in all these areas. The one I’m most familiar with, Photoshop-style image editors, is based on core abstractions dating from research done on 1970s graphics workstations with far-too-literal adaptations of darkroom photography practices with 19th century ideas about how color works embedded deeply, and there is huge room for improvement if someone is willing to reimplement everything from scratch on better foundations. It’s a several-year multiple-developer kind of effort though. I’m sorry about Apple in particular because it seemed like their Mac application software teams were on a roll from ~1997–2005, but have sort of stalled since then. (Some of what they’ve done since has been awesome, but overall in my opinion there’s been substantially less great stuff in the past 10 years than in the 8 years before that, and many apps feel severely neglected.) I am thankful that Apple (with help from Qualcomm, Samsung, Intel, etc.) keeps pushing the hardware side though. The new stylus, “retina” displays, better battery life in thinner computers and tablets, etc. are wonderful.
brwnll 11y ago
Instead of a more efficient business model, I'd offer that it's actually the difference between being a hardware and software company. Being a year or two late in software can often mean you product never has a chance to disrupt the first to market (assuming roughly equal quality product). Contrarily, Apple has shown time and again they can be several generations behind in specific technology (until they can "get it right") and still maintain demand for their products.
rhino369 11y ago
Comparing Apple to Qualcomm, Facebook, and Google is a mistake. Apple is a consumer electronics company. Typically consumer electronics companies don't R&D their components. iPhones use Qualcomm baseband chips. Apple does design some of their components, but that's actually atypical for a consumer electronics company. Even then, Apple needs someone like TSMC to fabricate them. So a lot of Apple's revenue goes to buying components of companies that are spending a lot on R&D. Qualcomm is making the components. They are doing the R&D because they have to. TSMC is R&Ding building 14 nm chips. Hynix is creating bigger NAND flash drives. Google and Facebook are different because they sitting on monopolies that print money. They also do much more in house because it's easier to. Apple has some ability to use their size and existing products to capitalize on new technologies. But it's probably better to just return their profits to their stockholders and let the market fund new R&D. Then again a lot of cool tech came from monopolies playing around excess profits (Bell Labs, Xerox, etc.).
- stcredzero 11y ago
  Then again a lot of cool tech came from monopolies playing around excess profits (Bell Labs, Xerox, etc.). But notoriously, a lot of cool tech that was developed at Bell Labs, Xerox, and Kodak ended up being so severely misunderstood by upper management there that outside companies were the ones to develop and sell products based on the new technology, while efforts to do so in house were practically or actually discouraged. These include such game changers as Object Oriented Programming, WYSIWYG word processing, Graphical User Interfaces, and Digital Cameras. However it happens, Apple is good at taking R&D, no matter where it originally happened, and creates game changing products out of it. One could argue that this is baked into the very DNA of the company. (Two of the oldest examples: Microprocessors ==> Personal Computing, and Graphical User Interfaces.) If you like, think of Apple as the anti-Xerox. It's not the company that spends tons of cash on internal R&D, misunderstands it, then winds up being unable to capitalize on it. It's the company that can take anyone's R&D or idea, understand the essentials of it, then executes great products. Why be the company that invents something, when you can instead be the company that profits from it?
- robszumski 11y ago
  Apple designs its own microprocessors, numerous sophisticated connectors, extremely small speakers, clicking hardware, touch sensors, metal plating processes, etc. While they partner with folks like Samsung, I don't think its fair to say that they only design "some" components. They are industry leading in many areas, including batteries.
johnchristopher 11y ago
What about their margins ? It seems commonly accepted that Apple has much better benefits for every piece of hardware they sell than any other players.

iMuzz 11y ago

Tl;dr: Apple only spends 3.5% of its revenue on R&D versus companies like Google, Qualcomm, and Facebook who spend 15%, 22%, and 21% respectively. (2015 stats)

deleted 11y ago

[deleted]

roymurdock 11y ago

R&D accounting for tech companies should somehow factor in M&A spend as this is becoming the de facto way to "generate" research and IP for large tech companies. > Apple’s relative thriftiness extends to its vaunted advertising and marketing operations. The company spent $3.5 billion on advertising and marketing over the past four quarters, while Google spent about $8.8 billion in the past three. R&D spending isn’t worthwhile if it never leaves the lab, says Tim Swift, a business professor at St. Joseph’s University in Philadelphia. “Apple’s products are going through some of the most effective and sophisticated marketing we’ve ever seen,” he says. “That’s the other half of what makes Apple the most productive R&D spender.” Surprising to see that Apple also spends less than 50% of what Google does in direct advertising. Amazing what kinds of costs you can cut when you have such strong marketing already built into the name, look, and design of your product.

guyzero 11y ago
Google's sales and marketing expense category consists of the following items (from their 10K) - some (perhaps most) of it is actually stock comp for sales & marketing employees. • Labor and facilities-related costs for our personnel engaged in sales and marketing, sales support, and certain customer service functions; • Advertising and promotional expenditures related to our products and services; and • Stock-based compensation expense for our employees engaged in sales, sales support, and certain customer service functions.

krallja 11y ago

Thanks for the autoplaying video ad!

cromwellian 11y ago

I read this as "how Apple relies on the R&D of other companies" For example, the quote about how IBM spent 100x as much on R&D as Apple. IBM has produced 6 Nobel prize winners that lead to revolutionary advancements in the industry which Apple "innovation" relies on. There would be no iPhone without the investments in basic research and process that has done been done at IBM, Bell Labs, Intel, et al. When I worked at IBM, I couldn't wait to read the next IBM Systems Journal, it was the only piece of "corporate" internal communications in any company I've ever worked for that I looked forward to. I worked at IBM T.J. Watson in the 90s and one of the things told to us during orientation is that our budget, and our research was separate and independent from the commercial divisions of IBM and we were free to work on stuff that wasn't necessarily commercially viable. Something rubs me the wrong way about this article and Apple's R&D spending. R&D spending is wasteful, it is a gamble, but every once in a while, it produces something incredible that leads to a huge net positive externality for the world. Some of the greatest inventions were done on research no one ever thought would have any commercial usage. These days politicians decry studies on bear DNA, or Shrimps on Treadmills, but who's to say these won't be vitally important things 20 years from now? Part of relying on the research advancements of others, standing on the shoulders of giants, IMHO, is to take your success and your profits, and invest them, continuing a kind of scientific "social contract" for those that come after you. Hoarding profits and bragging about how you can get away with making lots of money without having to hire many researchers is IMHO, a kind of parasitical attitude. On top of that, is the tendency of people to credit Apple for all advancements, even those that were tweaks on hard work done by others. Do I credit Apple for their graphics performance, or Microsoft, AMD, PowerVR, NVidia, SGI, and everyone else who over the past decade have invested massively into consumer 3D acceleration? Do I credit Apple for amazing battery improvements, or Intel or Samsung investments into NAND? Is the A9X more important than TSMC/Intel/Samsung fab innovations? Or IBM's introduction of STM, Magnetic Storage, Eximer Lasers? Science and Innovation are social endeavors relying on a community of shared progress. The secretive way Apple does R&D, their lack of publishing, and the way they promote this 'lone genius/inventor' view of the company rubs me the wrong way. I'm not saying Apple hasn't innovated, especially in mobile software, but won't should brag about not doing basic research, and banking a hundred billion in offshore cash to be used for what, stock buybacks? Just what is wrong with say, spending some of that money to fund research into say, quantum computing or medicine? Does every damn thing have to be applicable to the next iPhone?

mamon 11y ago

TL;DR: 3.5% of $233bln is more than 21% of $12.5bln. Is this just an article about basic math, or am I missing something?

brwnll 11y ago
Your missing something. Reading beyond the infographic, the article is really about how Apple is able to offset the need for R&D dollars (which as expanded from $4b in 2013 to $8.5b in 2015) by being an overwhelming large consumer of components ($29b committed next year). This causes the suppliers to invest heavily in R&D to be able to "wow" Apple and lock up big contracts with their innovations, instead of Apple needing to do it directly. The most interesting part to me is if this speaks to a counterpoint of the slow direction Apple appears to be taking moving more and more in house. This appears to indicate there is significant value by keeping key partners separate and in the free market, even with the lessened control of being a 3rd party.
- derefr 11y ago
  Seen that way, Samsung Electronics is basically an Apple subsidiary kept at arm's length to keep the market forces going.
  - illumen 11y ago
    Apple is a marketing arm of Samsung.
    - tellarin 11y ago
      I see what you did there. "... marketing ARM..." Clever. ;-)
- throwaway_ghj 11y ago
  No, you're missing something.

drpgq 11y ago

Is whatever was spent on something like buying FaceShift counted as R&D spending?

mark_l_watson 11y ago

Well, their absolute R&D spend seems to be working very well for them! That said, I wish Apple would invest more in their web services. I find iCloud, Siri, etc. to be not as good as services from Google and Microsoft. Because of (at least what I percieve is) Apple's fairly strong stand on the basic human right of privacy, I would probably award them all of by business is their web services were much better. As it is, in addition to Apple gear I also use a Chromebook, Android phone, and even a Windows 10 laptop (I was curious to kick the tires of Windows 10).

lrem 11y ago
I'm pretty sure I have read about some pretty strong stands for privacy from both other companies you mentioned too.
- mark_l_watson 11y ago
  I am a huge fan of Google's services but they do make money from our personal information. I am hopeful that Microsoft will evolve into a strong supporter of privacy, but with some (hopefully temporary) issues with Windows 10, I will wait and see what happens.
  - soylentcola 11y ago
    They make money from personal info but not necessarily in a way that would automatically be considered a violation of privacy. The best way I can think of it is to compare to cable TV. Insert some other service if you've never had or wanted cable TV. Right now I pay something like $40/mo for cable TV and still have to watch something like 15-18 minutes of advertising per hour of programming. The "Google version" of cable TV would either be free or cost a nominal $5/mo subscription and their algorithm would automatically use my viewing history to determine which ads might be applicable to me. As a result, I'd only have to watch a single 5 minute ad segment in the middle of every hour-long program. The better odds of a given ad being applicable would make the ad time more valuable so they wouldn't need to run as many to make the same amount of profit. Likewise, people and companies that want to reach potential customers waste less of their advertising and publicity budget on viewers that would never buy their products. So, gross oversimplification aside, there's "making money from personal info" and there's "using data to make the same money from less advertising than traditional methods". I'm sort of on the fence myself and somewhat playing devil's advocate here but it's something that's often lost in discussions. My main concerns are that government, law enforcement, or criminals would gain access to data that I only agreed to share with one company's algorithms. My main point is that "making money from personal data" can sound a lot like "selling my personal info to god knows who" which I've never known to be the case regarding Google or any of the info that's collected by Microsoft in newer versions of Windows. My main conflict is between two things: a reflexive distrust of the motives of business and an acknowledgement that some really cool things (and plenty of mundane but still good things) only work when you have the data to power them. It's definitely a complex issue and not something I'll solve in an overly-long comment while I waste the last 10 minutes before it's time to go home.

simonh 11y ago

Here's an article by Horace on Aymco in 2012 on this same subject [1]. Back then Apple was spending just north of $600 million a quarter on R&D (in 2011, which is when he had figures for). Since then to reach $8 billion a year, Apple would have had to increase spending by over %30 per year. That's a very impressive ramp up in spending, especially when sustained over a substantial period of time. The thing is their revenue growth has been so spectacular, it's swamped their otherwise dramatic increase in investment in R&D on a proportional basis. [1] http://www.asymco.com/2012/01/30/you-cannot-buy-innovation/ http://www.asymco.com/2012/01/30/you-cannot-buy-innovation/

wrsh07 11y ago

Are acquisitions considered money spent on R&D?

return0 11y ago

That's a polite way to say that apple is spending less on R&D.

eric_h 11y ago
They're spending less per dollar of revenue, but the amount they're spending in absolute terms is totally comparable to other big tech companies.

anindyabd 11y ago

I read this as: how successful you are has nothing to do with how innovative you are. The Apple formula: keep innovations at a minimum, but market all your products as the coolest thing that anyone has ever seen anywhere. With enough of a marketing budget, everyone will believe you.

bcohn91 11y ago
From the article: > Apple’s relative thriftiness extends to its vaunted advertising and marketing operations. The company spent $3.5 billion on advertising and marketing over the past four quarters, while Google spent about $8.8 billion in the past three.
s73v3r 11y ago
Yeah, no. If all they had was marketing, and the products were not actually good, then no one would buy version 2.
j2bax 11y ago
The only thing I can assume is that people like you haven't ever really used Apples full line of products and seen how seamless the experience is in comparison to anything else on the market. Or used one phone for 2-3 years and not felt completely crippled in that time. I have rarely used an Android device that didn't feel sluggish.

senthilnayagam 11y ago

apple is not a standalone research company, it is market driven, with its purchasing power for components and tooling budget is making its vendors innovate and that shows up