4 ms·

Most of the US tech sector doesn't spend all that much on R&D in comparison to its income and profits. For example, Alphabet reportedly spent $18 billion USD o

Most of the US tech sector doesn't spend all that much on R&D in comparison to its income and profits. For example, Alphabet reportedly spent $18 billion USD on R&D in 2018[0] but acquired $77 billion in gross revenues and $31 billion in net profits over the same year[1]. In comparison, Volkswagen spent $14.5 billion USD on R&D in 2018[0] but acquired only $54 billion (as converted from Euros at December 2018 exchange rates) in gross revenues and $13 billion in net profits[2]. If VW can spend that much on R&D, particularly as a percentage of revenues, without being an abusive monopoly, then so can Alphabet. [0] https://spendmenot.com/blog/top-rd-spenders/ https://spendmenot.com/blog/top-rd-spenders/ [1] https://www.marketwatch.com/investing/stock/googl/financials https://www.marketwatch.com/investing/stock/googl/financials [2] https://www.marketwatch.com/investing/stock/vow/financials https://www.marketwatch.com/investing/stock/vow/financials

tomweingarten 6y ago
This is meant to be satire, right? The percentage of revenues of the two examples you gave are nearly identical.
- granzymes 6y ago
  23% vs 26%.... I hope it's satire!
forrestthewoods 6y ago
> Most of the US tech sector doesn't spend all that much on R&D 25% of revenue on R&D seems like a pretty reasonable amount?
Nasrudith 6y ago
Looking at R&D by inputs alone is a mistake anyway. You could spend billions on attemptint to revive phrenology but that doesn't mean you'll get anything of worth. There are certainly times when it needs more but spending more into it isn't an intrinsic merit. Plus even if you have a fruitful program it doesn't mean it can always be scaled up meaningfully just because there is more money available. The output of R&D is what justifies it - although great potential may take a lot of time to vindicate. A low ratio would result from a successful matured program which simply cannot expand fast enough to reinvest. Under that metric a program with the top people paid industry leading salaries and pumping out generations of advances would be worse than a lab full of scammers which never produced any applications. That isn't a very useful metric.

tomweingarten 6y ago

This is meant to be satire, right? The percentage of revenues of the two examples you gave are nearly identical.

granzymes 6y ago
23% vs 26%.... I hope it's satire!

forrestthewoods 6y ago

> Most of the US tech sector doesn't spend all that much on R&D 25% of revenue on R&D seems like a pretty reasonable amount?

Nasrudith 6y ago

Looking at R&D by inputs alone is a mistake anyway. You could spend billions on attemptint to revive phrenology but that doesn't mean you'll get anything of worth. There are certainly times when it needs more but spending more into it isn't an intrinsic merit. Plus even if you have a fruitful program it doesn't mean it can always be scaled up meaningfully just because there is more money available. The output of R&D is what justifies it - although great potential may take a lot of time to vindicate. A low ratio would result from a successful matured program which simply cannot expand fast enough to reinvest. Under that metric a program with the top people paid industry leading salaries and pumping out generations of advances would be worse than a lab full of scammers which never produced any applications. That isn't a very useful metric.