Did you know: Apple spends a very small percentage of of its revenue on R&D
posted by Victor H. / Dec 01, 2015, 3:54 AM
Research and development is a key element of a company's future growth. And it usually shows in the balance sheets: it's hard to give an average, but the Silicon Valley tech giants usually spends double digit percentage of their revenue on R&D.
Taking the most recent fiscal years of companies as a base for all the figures in this article, Google, for instance, spent nearly $10 billion on research, a truly massive sum that makes up 15% of the company's revenue.
Multiple times less than rivals in terms of percentage of the revenue, but still a lot in monetary termsThen, you have others like Qualcomm and Facebook that spent more than 20% of their revenue on R&D to fuel further growth and ensure they stay ahead in their fiercely competitive markets.
Apple, on the other side? The company based in Cupertino spent a shockingly low percentage of its money on R&D: 3.5%. While the percentage alone might be a bit of a shock, it results in a rather sizable actual amount of $8.15 billion given the company's massive $233 billion revenue. Put simply, in monetary terms, Apple spends less than Google on R&D, but not by much. Compared to the other two companies we have taken for comparison - Qualcomm and Facebook - Apple's research and development figure is in fact larger.
Here is the breakdown for four of the biggest Silicon Valley companies:
- Apple 3.5% of $233 billion, $8.15 billion
- Google 15% of $66 billion, $9.9 billion
- Qualcomm 22% of $25.3 billion, $5.56 billion
- Facebook 21% of $12.5 billion, $2.625 billion
Apple has traditionally held to a more conservative view on R&D spending, with a philosophy on restricted research spending dating back to early Steve Jobs days. With the booming popularity of its iPhone, Apple is in the fortunate position to have suppliers of various chips and other components compete with each other in order to get those potentially huge Apple orders. This way, those companies take some of the R&D load that would otherwise be on Apple.
Then, looking from a historical perspective, one sees that Apple has actually increased R&D in quite a significant way in fiscal 2015: the $8.1 billion figure succeeds $6 billion of spending in 2014, and nearly half the sum, or $4.5 billion, in 2013. The increase is largely attributed to Apple's growing chip efforts: starting with the iPhone 5 and its Apple A6 chip with a custom Swift CPU core.
Furthermore, a rapidly growing workforce and expenditure related to the new Apple headquarters, as well as manufacturing and tooling have had an impact on R&D.
Posts: 1346; Member since: Jun 20, 2012
But this is well known. And it describes the ethos of the company based on crazy levels of brand loyalty and marketing than on innovation. People mistake often Apple with innovation but it's mostly marketing.
posted on Dec 01, 2015, 4:00 AM 35
Posts: 6794; Member since: Mar 29, 2012
Marketing also take a lot of effort to get it right and Apple has done that very well. If its easy, how come Samsung with all their hardware innovation could not beat Apple in term of raking in the profit. Samsung has the best OLED screen, the fastest solid state drive, the most power efficient 14nm silicon manufacturing prowess. So marketing to create brand loyalty is still key to a company success, more than innovation I dare say.
posted on Dec 01, 2015, 9:13 PM 1
Posts: 2340; Member since: Feb 14, 2011
While I understand it ends up being the same amount of R&D spent as the other big tech companies, just imagine if they doubled or tripled the amount. They could shut out the competition altogether and be working on things other companies may not get to for years. But, I suppose they are resting on their laurels and hoping business is going to continue being done the way it has for the past few years.
posted on Dec 01, 2015, 4:16 AM 5
Posts: 25; Member since: Feb 15, 2015
Apple is increasing R&D spending by 30-40% per year (6B in 2014, 3.5B in 2013, 2.4B in 2012) . R&D budget should reach 10B this year.
posted on Dec 01, 2015, 4:26 AM 1
Posts: 981; Member since: Jul 07, 2014
Not nearly the same as Samsung and LG, which are already spending more than double what Apple does. Btw, it's not only about spending. You actually have to bring things to light in r&d. Apple will never shut down the competition because only simple consumers and loyalists buy Apple.
posted on Dec 01, 2015, 4:52 AM 8
Posts: 25; Member since: Feb 15, 2015
No they aren't spending "more than double". Samsung's R&D is ~14.5B (less than double, and Samsung has way more products plus semiconductor and display divisions). LG's R&D budget is 5.6B, which is far less than Apple's 8.15B.
posted on Dec 01, 2015, 5:34 AM 1
Posts: 5029; Member since: Mar 30, 2015
More than double the % of the revenus in R&D. Apple not even in top 20 R&D spender since 10 years. The more money you make the more you supposed to put in R&D. Do you know Apple spend more a year in marketing than R&D?
posted on Dec 01, 2015, 9:53 AM 1
Posts: 14967; Member since: Sep 25, 2013
I dont totally agree. Just because you make more money, doesn't mean you have to raise R&D costs. For one, Apple's product portfolio is so small. The reason they spend less money is their products are less diverse. Example, the iPod Touch, iPhone and iPad are all basically the same device that share all their components across the board. so those products basically need one update and they all can share it and only require some slight changes. Then you have the Apple Watch which shows no R&D budgeting whatsoever. But I supposed they used some. Then all that si left si the Mac and OSX. OSX other than looks hasnt changed one bit since the original other than going X86 over PPC. But the Mac hardware itself has seen very little to no change other than hardware upgrades from Intel/Nvidia. When you have such a small product line, products that are basically identical every year, you wont spend much to make changes. They probably spend more on R&D paychecks, than actually engineering. Consider Samsung who has a vast product portfolio that includes chips, batteries, modems, displays, computers, tablets, phones and more, then they will spend more money especially if they change stuff every year which they do. If Samsung used the same exact phone design 2 years in a row, they would be ridiculed to death. Just watch. If the S7 isnt designed different enough from the S6, watch what happens.
posted on Dec 01, 2015, 2:12 PM 2
Posts: 5029; Member since: Mar 30, 2015
Dr Phil Apple not even in top 20 most R&D spender. Samsung ( 13.4 billion in 2014) and microsoft both have much more R&D than Apple. Not only in % of revenue but in total spending. So yeah Apple spend same % as those company and start innovating again. After all you have the money and sell hardware high enuf no? Of right wont do it as you need to make MORE and MORE year after year... Right money before innovation!
posted on Dec 01, 2015, 9:50 AM 1
Posts: 1410; Member since: Mar 02, 2014
Part of the reason why Sony is in so much trouble is because of the exact reason. Why do top companies always end up slacking off and end up putting themselves in the red? Not that it'll happen to Apple anytime soon but it they keep it up it'll happen much sooner than we all expect.
posted on Dec 01, 2015, 10:51 AM 1
Posts: 203; Member since: Jul 25, 2015
Not necessarily. Apple appeals to consumers with simplicity. A 1080p screen on the Plus model results means they can make the battery smaller, and reap higher performance from their processor. They deliberately make their products to be more than the sum of their parts, as opposed to other OEMs which just push up specs for the sake of it.
posted on Dec 01, 2015, 7:25 PM 0
Does this include buying up companies and talent, or financing R&D in other companies to get first dibs on developed tech? Why spend the work hours if you can buy it? OR Look at it from the end-product perspective: Take Samsung for example - they add every concevable little gimmick and feature possible - making android a clutter mess. While apple concentrates on a few worthy features that hold up their own. How much crap has Touch wiz added thru time and dropped a year later - but what Apple added to iOS set a trend for the entire industry... (no, making touchscreens bigger really isn't something new, it's just bigger of what already exists).... Maybe it's just me, but why work hard when you can work smart (as the saying goes)....
posted on Dec 01, 2015, 4:35 AM 10
Posts: 358; Member since: Dec 13, 2010
to get first dibs on developed tech??? pff! haha I'm a little confused. Are you talking about those old LCD panels, or the forcetouch(which is old tech) or maybe those 8-12 megapixzel modules. oh wait. you must be talking about 750p resolution... yeah that must be it... buy out old tech and design everything to keep peoples' money trapped within their ecosystem. #innovation OR maybe you mean finally adding vibrant colors to the iphone c models... I guess that's the closest you guys will get to amoled vibrant colors for now. OR why develope when you can just steal it from universities
posted on Dec 01, 2015, 4:54 AM 22
Or multitouch, or 64bit on a mobile, or FP sensors that work, or mobile pay that matters, or forcetouch that androids are clamoring to build "next year" just like they're still trying to catch up with fully "64bit" ecosystem... How about at least one Manufacturer actually build their own OPERATING SYSTEM for a change, instead of installing some 3rd party freeware and then bloat them like a garbage landfill... How much did Samsungs' Hartrate monitor cost them in R&D - that I was able to easily do the same with a free app and rear camera? "vibrant" lol, it's over-saturated... learn it right! Rick, you have no clue, bro... stick to android... I'll stick to what I know is better!...
posted on Dec 01, 2015, 5:04 AM 7
Posts: 21778; Member since: May 28, 2014
BlackBerry owns several patents in Force Touch technology. The ill-fated BlackBerry Storm was the precursor to Apple's force touch. Both BlackBerry and Microsoft built and use their own home-grown OS's for smartphones, as did Nokia and Palm, long before Apple entered the market.
posted on Dec 01, 2015, 5:35 AM 14
Posts: 358; Member since: Dec 13, 2010
mobile pay that matters? hahahaha I use samsung pay everywhere I go leaving iphone users saying. " man that's really cool, is that an app?", you are getting it wrong, apple is not the first witht the tech nor are they the first to develop it, they just make it popular because of there are so many sheep. trying to catch up with 64 bit? LOL (that's all that deserves..) bloat like that apple watch app that instead of functionality, they simply are just trying to shove another sale down your throat.. You are right. garbage landfill lol And you are right, don't speak about what you don't know. You obviously don't know about the gamut in OLED panels and how sofftware can dynamically control it. I don't expect you to since you have an iphone.... "over-saturated" LOL I'll stick to android and you stick to what you think is better... thanks for the laugh :)
posted on Dec 01, 2015, 5:37 AM 16
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