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Apple sinking more money into R&D as spending rose $1B in 2012

post #1 of 71
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In Apple's 10-K filing with the SEC, it was revealed that the company increased spending on research an development by almost $1 billion, representing a nearly 40 percent increase from one year ago.

Apple on Wednesday outlined the significant bump in its SEC filing, noting that it had increased research and development spending by 39 percent, or $953 million, during the 2012 fiscal year to hit $3.4 billion.

The nearly $1 billion boost in R&D compares to growth of $600,000 during fiscal 2011 and $500,000 in fiscal 2010.

The massive increase in spending is likely the result of a multitude of new Apple products unveiled throughout the year. Most notable among the new devices, and perhaps most costly to rollout, are the iPhone 5 with its new A6 processor, the 13- and 15-inch MacBook Pro with Retina display (< a href="http://appleinsider.com/articles/12/10/30/review-apples-13-inch-macbook-pro-with-retina-display/page/5/">1, 2), the totally redesigned iMac. Apple's iPod line, Mac mini and 9.7-inch iPad also received iterative refreshes.

iPhone 5 Chamfer
Unique milling process creates a chamfer around the iPhone 5's perimeter. | Source: Apple


From Apple's filing:

[Apple] continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company?s core business strategy. As such, [Apple] expects to make further investments in R&D to remain competitive.


While Apple has incrementally increased its R&D investments over the past three fiscal years, the spending continues to represent only a small portion of overall expenditures and an even smaller percentage of net sales. For example, in 2010 R&D represented only 3 percent of net sales, while 2011 and 2012 saw a decrease to 2 percent.

Overall, Apple's capital expenditures for 2012 came out to $10.3 billion, with retail accounting for $856 million, while $9.5 billion went to "other" expenses including product tooling and manufacturing. For the upcoming fiscal year, the company said it anticipates spending to drop to $10 billion.
post #2 of 71
I remember in the nineties I was amazed Apple could spent $1 million/day on R&D. Now, at $3.5 billion a year, it's nearly $10 million/day.

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post #3 of 71

I wonder whether Apple is working towards a fully automated production chain?

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post #4 of 71

Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

post #5 of 71
Originally Posted by MiddleGuy View Post
Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

 

Which you know, of course, since you… 

 

What, exactly?

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post #6 of 71
But "Apple never invented anything" /s

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post #7 of 71

"The growth in R&D expense was driven by an increase in headcount and related expenses to support expanded R&D activities."

 

It's about time they paid their people more.  Everybody in Silicon Valley knows Apple salaries are not that competitive for the amount of work you do.
 

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post #8 of 71
Originally Posted by Suddenly Newton View Post
But "Apple never invented anything" /s

 

"Wow, why does a company that exists only because of marketing spend any money on "research" or "development"? I guess it's research into new sales lies and development of new false advertising techniques." lol.gif


Originally Posted by Russell View Post
…Apple salaries are not that competitive for the amount of work you do.

 

Putting a dent in the universe should be its own reward.

Originally posted by Marvin

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Originally posted by Marvin

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post #9 of 71
Quote:
Originally Posted by Tallest Skil View Post

 

 

Putting a dent in the universe should be its own reward.

 

Yeah right. Tell that to Bob Mansfield.  Oh, and why don't you apply for a job there and tell them you'll do it for less than anybody else.

No matter what type of media...movies, music, books, photos and web pages

look better and sound better on the Kindle Fire HD and HDX than any iPad

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No matter what type of media...movies, music, books, photos and web pages

look better and sound better on the Kindle Fire HD and HDX than any iPad

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post #10 of 71

Shouldn't the tile read

"Samsung, Asus, HP, etc. R&D sees a boost as Apple sinking more money into R&D as spending rose $1B in 2012"

post #11 of 71
Quote:
Originally Posted by MiddleGuy View Post

Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

I don't disagree that more could be better but to make such a specific claim should be backed up with a detailed explanation as to how you derived that figure.

Quote:
Originally Posted by IQatEdo View Post

I wonder whether Apple is working towards a fully automated production chain?

Only if they convert Foxconn workers to Cybermen.

http://upload.wikimedia.org/wikipedia/en/5/59/Cyberman_-_Army_of_Ghosts_episode_%282006%29.jpg

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post #12 of 71
Quote:
Originally Posted by Tallest Skil View Post

 

Which you know, of course, since you… 

 

What, exactly?

 

Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

post #13 of 71
Quote:
Originally Posted by Russell View Post

It's about time they paid their people more.  Everybody in Silicon Valley knows Apple salaries are not that competitive for the amount of work you do.

Why, because thy can? Those employees also have te choice to work for another company. If they can get more money from everybody else in Silicon Valley and that is their sole thing they look for in a company then they should seek employment elsewhere.

I know I'd take a substantial pay cut to work at Apple's upcoming HQ onpared to the same work for MS, Nokia, RiM, Samsung, Sony, Acer, HP, Dell, Asus, et al. I et many hear would to because there are many other actors that make a job fulfilling than your salary.

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post #14 of 71
They should watch QC too.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #15 of 71
Quote:
Originally Posted by MiddleGuy View Post

Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

Apple never throws money at a problem, and they seem to making great decisions for the past 5 years, so...
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #16 of 71

Sounds like Apple is going to be bringing out some game changing SoC's in the future.

post #17 of 71
Quote:
Originally Posted by MiddleGuy View Post

 

Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

Actually 2% is brilliant if you consider the amount of innovative devices coming out of cupertino. 

post #18 of 71
Quote:
Originally Posted by MiddleGuy View Post

Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.
So the amount of money as a % of revenue is the only thing that matters? Samsung makes a gazillion products compared to Apples focus on a few products. And chip making is inherently expensive which explains Intel , Qualcomm and AMD spending more.

Apple is also more profitable. If you run a highly efficient company you can make those R&D dollars go further. Judging based on % alone is asinine.

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post #19 of 71
All of those companies also make components, which they use as economies of scope. Therefore, it is more profitable to spend more on R&D, since they are selling their parts to Apple and other companies, whereas Apple is a buyer of components to make their products.
post #20 of 71

The increase in R&D may be influenced by legacy, continuing, and probably growing R&D spending at recent acquisitions C3 Technologies (mapping, 8/11), Anobit (flash memory, 12/11), Chomp (search, 2/12), and AuthenTec (security, 7/12). These are all areas that Apple is highly motivated to invest in.

 

I would not ascribe it to R&D for manufacturing processes, although R&D to create a nice bevel takes SOME work, I guess. But most of that R&D will likely be born by the machine tool manufacturer. Apple says "we want to do such and so" and the machine tool guys say "great! We'll look into it."


Edited by JONOROM - 10/31/12 at 6:34pm

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post #21 of 71
Quote:
Originally Posted by MiddleGuy View Post

Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

Here's a clue: Apple is not Intel. Apple is not AMD. Apple is not Qualcomm.

Microprocessor manufacturing is extremely expensive. Designing a new case is not. Furthermore, there's the matter of efficiency. Apple is extremely efficient with their R&D expenditures. At some point, spending more money is wasted - as you end up with duplicated effort and waste.

In the end, the only thing that matters is results. Apple has something like 10% of the mobile phone business and the entire industry is scrambling to copy them. Apple completely reinvented the personal music player business. Apple completely reinvented the mobile phone business. Apple completely reinvented the tablet business. Apple reinvented the ultralight computer business. Apple is in the process of reinventing casual gaming. So Apple's R&D expenditures appear to be more than adequate.

Ultimately, Apple is in an infinitely better position to determine how much money they should spend on R&D than you are. Calling their expenditures lame when they've reinvented so many industries is merely evidence that you don't know what you're talking about and/or you are mindlessly attacking Apple without any evidence to back you up.
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post #22 of 71

I hope all these recent changes mean better software quality. I have been disappointed in the increasing number of bugs in Apple software. iPhoto '11, for example, has been a non-stop disaster, and recent iTunes versions often take 30 minutes to sync my phone where it used to take less than three. I think they have been more interested in adding features than in making sure it all works. The decision to delay iTunes 11 is a good sign, as is this increase in R&D spending.

 

Of course I always wondered how Microsoft could have 65,000 employees and still have so many bugs.

 

P.S. I must say I use Siri all the time for dictation and have very few complaints, the main one being that the server just never responds way too often. But I now use Siri to dictate all my email and text messages on my phone, and to do simple search queries. iOS 6 Maps, on the other hand, are a disaster for me as a public transportation user.


Edited by TokyoJimu - 10/31/12 at 6:59pm
post #23 of 71
With that kind of money maybe they could build a MacPro machine... Nah.
post #24 of 71
Originally Posted by MiddleGuy View Post
Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

 

Because numbers = good. This is the extent of your understanding?

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Originally posted by Marvin

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post #25 of 71
Quote:
Originally Posted by justamacguy View Post

With that kind of money maybe they could build a MacPro machine... Nah.


 If Apple would just start with the recently-announced 48-core mobile chip from Intel, it would be all downhill from there....! You could carry it in your pocket. But you have to wait 5-10 years for it.

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post #26 of 71

Seeing as Apple has been granted 1066 Patents and climbing the R&D pricing makes complete sense. More importantly, the % of actually implemented patents by Apple is much larger than the industry average.

 

They patent to make products.

 

They don't patent to block products from being made.

post #27 of 71
Quote:
Originally Posted by jragosta View Post


Here's a clue: Apple is not Intel. Apple is not AMD. Apple is not Qualcomm.
Microprocessor manufacturing is extremely expensive. Designing a new case is not. Furthermore, there's the matter of efficiency. Apple is extremely efficient with their R&D expenditures. At some point, spending more money is wasted - as you end up with duplicated effort and waste.
In the end, the only thing that matters is results. Apple has something like 10% of the mobile phone business and the entire industry is scrambling to copy them. Apple completely reinvented the personal music player business. Apple completely reinvented the mobile phone business. Apple completely reinvented the tablet business. Apple reinvented the ultralight computer business. Apple is in the process of reinventing casual gaming. So Apple's R&D expenditures appear to be more than adequate.
Ultimately, Apple is in an infinitely better position to determine how much money they should spend on R&D than you are. Calling their expenditures lame when they've reinvented so many industries is merely evidence that you don't know what you're talking about and/or you are mindlessly attacking Apple without any evidence to back you up.

 

Apple has 10% of the mobile total business, but easily > 50% of all its potential profits.

post #28 of 71
Originally Posted by mdriftmeyer View Post

They patent to make products. They don't patent to block products from being made.

 

Yep. But I would say that in the case of some patents involving invasive advertising, it looks more like they did it to keep others from being able to do it.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

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post #29 of 71
Quote:
Originally Posted by MiddleGuy View Post

Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

 

Yeah, because Apple should aim to hit some random percentage of their revenue, instead of spending exactly the amount of money that they need on R&D. I very much doubt they're skimping, but there's no point in simply burning more money for the hell of doing so. The amount of money spent on R&D shouldnt scale linearly with your profits, thats a little ridiculous. 

post #30 of 71
Quote:
Originally Posted by Russell View Post

"The growth in R&D expense was driven by an increase in headcount and related expenses to support expanded R&D activities."

 

It's about time they paid their people more.  Everybody in Silicon Valley knows Apple salaries are not that competitive for the amount of work you do.
 

The average salary for an Apple engineer is approximately $115,000 a year, second only to Google & Facebook, but not that far behind. That's just base salary, Nevermind all the benefits, stock options, etc.

post #31 of 71

The thrust of this story seems in such opposition to yesterday's article in which Steve Ballmer jabs Apple as being a "low volume player." One company continues to imagine the future with a commitment to quality, while the other can't even imitate well, much less innovate.

 

Before you label me a fanboy, let me say no company is perfect and that includes Apple. Likewise, no company is completely without merit. But man, the world appreciates an elegant solution and to knock a world-class leader with hollow rhetoric is just plain pathetic.

post #32 of 71
Quote:
Originally Posted by MiddleGuy View Post

Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

Samsung spends 8% of its money on photocopiers? Wow.
post #33 of 71
Quote:
Originally Posted by SolipsismX View Post


Why, because thy can? Those employees also have te choice to work for another company. If they can get more money from everybody else in Silicon Valley and that is their sole thing they look for in a company then they should seek employment elsewhere.
I know I'd take a substantial pay cut to work at Apple's upcoming HQ onpared to the same work for MS, Nokia, RiM, Samsung, Sony, Acer, HP, Dell, Asus, et al. I et many hear would to because there are many other actors that make a job fulfilling than your salary.

It's not that difficult to get hired by Apple. I assumed you aren't working there. Why?

post #34 of 71
Quote:
Originally Posted by Shameer Mulji View Post

The average salary for an Apple engineer is approximately $115,000 a year, second only to Google & Facebook, but not that far behind. That's just base salary, Nevermind all the benefits, stock options, etc.

Which enables a low-middle class lifestyle in Cupertino and other valley cities. I would never work there for that little money.

post #35 of 71
Quote:
Originally Posted by mdriftmeyer View Post

 

Apple has 10% of the mobile total business, but easily > 50% of all its potential profits.

Actually, latest estimates show Apple with 16.5% of the total worldwide mobile market.  If you count only smartphones, it hovers around 30%. Not shabby but still room for serious growth.  Samsung is still overall market share leader by a 2:1 margin.

post #36 of 71
Quote:
Originally Posted by galore2112 View Post

Which enables a low-middle class lifestyle in Cupertino and other valley cities. I would never work there for that little money.

$115,000 a year is low-middle class? Since when?

post #37 of 71
Originally Posted by Shameer Mulji View Post
$115,000 a year is low-middle class? Since when?

 

Since place of residence.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

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post #38 of 71
Quote:
Originally Posted by galore2112 View Post

It's not that difficult to get hired by Apple. I assumed you aren't working there. Why?

I don't live in Cupertino and they seem pretty hell bent on maintaining their HQ there. In all honestly, I haven't actually contacted Tim Cook to see if he'll relocate their entire company to my town just so I could work there so I guess that's my fault.
Edited by SolipsismX - 10/31/12 at 8:22pm

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post #39 of 71
Originally Posted by SolipsismX View Post
I don't live in Cupertino and they seem pretty hell bent on maintaining their HQ there. In all honestly, I haven't actually contacted Tim Cook to see if he'll locate to my town just so I could work there so I guess that's my fault.

 

Dear Tim,

 

My city is fairly small and surrounded by farmland. You can redesign Apple HQ to completely circle the city. Shouldn't be too hard.

 

You know what to do,

 

Skil

Originally posted by Marvin

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Originally posted by Marvin

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post #40 of 71
That is almost 900 million a quarter. More than enough money to make three Hollywood block buster movies a quarter. These numbers are staggering.

One problem I had with this is that R&D can be booth long term and short term. That is the money likely goes to immediate new products like IPad or iPhone and then a portion goes to longer term research. It is this longer term research that is most interesting and likely under very tight wraps. The next most likely product is the Mac Pro or its replacement. What they are working on for after that is where the potential new products are. I wouldn't be surprised to find something delivered early spring of next year.

As to Apples spend rate, yes it is pathetic. I base this not on the percentage value but in the quality slippage we are seeing in some software. Also beyond thin I'm not seeing huge innovation on the desktop.
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