Apple's R&D spending grew $303M in March quarter as company invests heavily in future products
Apple continues to invest a considerable amount of money into research and development for future products, as costs ballooned to $1.42 billion in the just-concluded March quarter, with signs from the company that those expenses may continue to grow even further.
The $1.42 billion Apple spent on research and development in its second fiscal quarter of 2014 represented a $303 million increase from the same period a year ago. As a percentage of net sales, it was 3.1 percent in 2014, up from 2.6 percent of sales in March of 2013.
R&D costs are also up about $90 million sequentially. To date, Apple has spent some $2.75 billion on R&D in fiscal 2014, up from $2.13 billion in the same six-month span of 2013.
To further put the numbers in perspective, Apple spent $2.68 billion on its entire R&D budget in the five years before the first iPhone was released. The company exceeded that amount in just the first six months of fiscal 2014.
In its 10-Q filing with the U.S. Securities and Exchange Commission, Apple said the increased spending was "driven primarily by an increase in headcount and related expenses to support expanded R&D activities." The investments are said to be "directly related to timely development of new and enhanced products."
Apple's executive team also touched on R&D costs during the company's quarterly earnings conference call, when Corporate Comptroller Luca Maestri said Apple expects operating expenses to be between $4.4 billion and $4.5 billion in the current June quarter. For comparison, total operating expenses in the March quarter, including R&D, were $4.35 billion.
"We are continuing to invest heavily in R&D for current revenue generating categories as well as future products and services," Maestri said on Wednesday.
Apple Chief Executive Tim Cook also cited escalating R&D investments as a key reason why his company needs to have ample cash on hand. Apple ended the quarter with a whopping $150.6 billion in cash plus marketable securities, 88 percent of it held overseas.
"We'll continue to innovate by investing in research and development and capitalizing on our strengths in hardware, software and services," Cook said.
If Apple's R&D spending continues to grow at the same rate, it would increase by about $100 million sequentially in the June quarter, topping $1.5 billion.
The $1.42 billion Apple spent on research and development in its second fiscal quarter of 2014 represented a $303 million increase from the same period a year ago. As a percentage of net sales, it was 3.1 percent in 2014, up from 2.6 percent of sales in March of 2013.
Apple spent more on R&D in the first six months of fiscal 2014 than it did in the five full years prior to the launch of the iPhone.
R&D costs are also up about $90 million sequentially. To date, Apple has spent some $2.75 billion on R&D in fiscal 2014, up from $2.13 billion in the same six-month span of 2013.
To further put the numbers in perspective, Apple spent $2.68 billion on its entire R&D budget in the five years before the first iPhone was released. The company exceeded that amount in just the first six months of fiscal 2014.
In its 10-Q filing with the U.S. Securities and Exchange Commission, Apple said the increased spending was "driven primarily by an increase in headcount and related expenses to support expanded R&D activities." The investments are said to be "directly related to timely development of new and enhanced products."
Apple's executive team also touched on R&D costs during the company's quarterly earnings conference call, when Corporate Comptroller Luca Maestri said Apple expects operating expenses to be between $4.4 billion and $4.5 billion in the current June quarter. For comparison, total operating expenses in the March quarter, including R&D, were $4.35 billion.
"We are continuing to invest heavily in R&D for current revenue generating categories as well as future products and services," Maestri said on Wednesday.
Apple Chief Executive Tim Cook also cited escalating R&D investments as a key reason why his company needs to have ample cash on hand. Apple ended the quarter with a whopping $150.6 billion in cash plus marketable securities, 88 percent of it held overseas.
"We'll continue to innovate by investing in research and development and capitalizing on our strengths in hardware, software and services," Cook said.
If Apple's R&D spending continues to grow at the same rate, it would increase by about $100 million sequentially in the June quarter, topping $1.5 billion.
Comments
R&D doesn't just develop products, it develops people. Woz and to some degree, Jobs, got their start in part with the aid of a once great R&D institution, Hewlett Packard. Can't imagine the boost to the human capital that R&D spending by companies like Apple has provided. Go Apple, (and Tesla, SpaceX and the others... well, some of the others lol).
Hey Apple do want someone to help you with that problem. Let me give you my number!
nuff said
Go Apple, (and Tesla, SpaceX and the others... well, some of the others lol).
I love R&D and the idea of pushing technology forward. But Tesla and SpaceX are telling examples because Elon Musk was able to develop them with only tens of millions, and he got an electric car that's actually better than gas cars, and rockets cheaper than anything any government ever built. Whereas Apple is investing billions for incremental improvements year after year.
Sometimes I think the world would be better off if not so many people focussed on IT and instead things were a bit more balanced between IT and other tech industries.
What? Apple spends less on R&D than Samsung spends on smartphone advertising? Wholly [sic] cow! No wonder Apple can't innovate!
/s
edit: figured I better document the Samsung spend:
"In 2012 Samsung spent an estimated $4.3B USD globally on advertising its smartphone product... four times the marketing spending of Apple."
From: http://www.dailytech.com/Slow+Samsung+Galaxy+S+IV+Sales+Advertising+Expenses+Trigger+Earnings+Miss/article31901.htm
Samsung is excited to see what Apple is building for them to copy.
The irony is this: "Apple spent $2.68 billion on its entire R&D budget in the five years before the first iPhone was released." Yet, Samsung spent almost twice that amount on advertising their smartphone rip-offs in 2012 alone. One has to wonder what Samsung might have been able to invent/innovate had they shifted half their ad budget over to R&D. Some true innovation? Or just more innovative rip-offs?
Or, Sammy could have gone the Facebook route, and just bought some innovation.
I love R&D and the idea of pushing technology forward. But Tesla and SpaceX are telling examples because Elon Musk was able to develop them with only tens of millions, and he got an electric car that's actually better than gas cars, and rockets cheaper than anything any government ever built. Whereas Apple is investing billions for incremental improvements year after year.
Sometimes I think the world would be better off if not so many people focussed on IT and instead things were a bit more balanced between IT and other tech industries.
Interesting that you mention IT specifically. I feel that Apple has moved forward with faltering steps, except in respect of overt hardware design, which continually and successfully pushes the envelope. However, comparing Elon Musk's companies with Apple is perhaps mainly illuminating of the differences between them that result from circumstance rather than design. Apple is a long established business in very competitive markets that has everything to lose, whereas SpaceX and Tesla are hungry startups that are parameterising anew their respective industries and have everything to gain. This lesson hasn't been lost on Apple, which has participated in the startup game by it seems, going on a bit of a spending spree buying startups.
This is certainly exciting, but I still say Apple needs to put more effort into improving Maps. The once a year updates aren't suited well to mapping IMO. It's not good enough when you report the same issue three times over a yearly period and receive no reply or no fixes. Heck, forget the notification reply, just fix the damn thing. They should have a couple of people driving around this country checking out the more serious issues being reported. I'd say they have a big backlog of reports here, and I also think the need to redo the UI and options for reports, because currently it sucks.
Apple has improved the map app on a more regular basis. It, however, hasn't fundamentally changed it. It has made a lot of map related purchases. I suspect it takes time to take all of that technology it has purchased to incorporate it into its mapping product.
My biggest grievance with the map app is not with its ability to give directions, it does that extremely well. Instead, its reliance on sources like Yelp for point of data information is holding Apple's efforts back. I suspect the reason you wait so long for some corrections to be made, is third party companies like Yelp are in charge of making the changes. I am hoping that Apple addresses that need in a significant update.
I love R&D and the idea of pushing technology forward. But Tesla and SpaceX are telling examples because Elon Musk was able to develop them with only tens of millions, and he got an electric car that's actually better than gas cars, and rockets cheaper than anything any government ever built. Whereas Apple is investing billions for incremental improvements year after year.
Sometimes I think the world would be better off if not so many people focussed on IT and instead things were a bit more balanced between IT and other tech industries.
For good or ill, Apple's investment of billions of dollars in software and hardware has returned much, much more to it's investors than Tesla's "tens of millions" (which I expect is understated). Part of the lesson is that it's expensive to develop products that are worth a lot more to consumers than the cost of manufacturing. Tesla may figure out how to do that someday, but they haven't yet.
The irony is this: "Apple spent $2.68 billion on its entire R&D budget in the five years before the first iPhone was released." Yet, Samsung spent almost twice that amount on advertising their smartphone rip-offs in 2012 alone. One has to wonder what Samsung might have been able to invent/innovate had they shifted half their ad budget over to R&D. Some true innovation? Or just more innovative rip-offs?
Or, Sammy could have gone the Facebook route, and just bought some innovation.
The funny thing is that Samsung actually has a higher R&D budget per year than Apple. In 2013 it spend 10.4 billion in R&D, second highest in the world. This of course is not only the mobile department. But for example Google's spending on R&D was also higher than Apple's in 2013, Google had a R&D budget of 6.8 billion. Microsoft does even better than Google with 9.8 billion. Apple didn't rank in the top 20.
So weirdly Apple's R&D budget is small when compared with other competitors.
http://www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/2013-global-innovation-1000-study#prettyPhoto
I thought Merecedes spending $1 million a day in R&D was stupendous. Apple continues to blow my mind with brain-wrecking numbers.
Also makes me excited about new products to come. Getting very very fidgety now.
Apple keeps the iteration and failures secret until something is developed enough to reveal. We have no idea what they have been working on, save for rumors and baseless speculation.
The funny thing is that Samsung actually has a higher R&D budget per year than Apple. In 2013 it spend 10.4 billion in R&D, second highest in the world. This of course is not only the mobile department. But for example Google's spending on R&D was also higher than Apple's in 2013, Google had a R&D budget of 6.8 billion. Microsoft does even better than Google with 9.8 billion. Apple didn't rank in the top 20.
So weirdly Apple's R&D budget is small when compared with other competitors.
http://www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/2013-global-innovation-1000-study#prettyPhoto
Yeah but Apple aren't spending money copying vacuum cleaners.