Apple R&D spending jumps to $2.5B in Q2, accounted for 5% of total revenue
Apple's research and development spending spiked at an all time high of more than $2.5 billion during the second quarter of 2016, with the unusually large $600 million year-over-year jump owing primarily to new hires and related expenses, Apple said in a Securities and Exchange Commission filing.
The location of Apple's forthcoming Cambridge R&D center in the U.K.
According to Apple's most recent regulatory filing, a total of $2.51 billion was spent on R&D operations during the three-month period ending in March, a figure up 31 percent from the same time last year. The outlay comes out to 5 percent of Apple's net sales for the quarter, a significant increase for a company that normally commits around 3 percent to R&D activities.
On a six-month basis, R&D costs hit $4.9 billion, or 3.9 percent of net sales for the period, up 29 percent from $3.8 billion and 2.9 percent of net sales in the year ago quarter. As in years past Apple said the spending escalation was fueled by an increase in hires and "related expenses," including compensation and material costs.
CEO Tim Cook during an investor conference call on Tuesday reconfirmed Apple's commitment to research and development, noting the acquisition of 15 companies over the past year whose assets will be rolled into future products and services.
In addition to R&D, Apple listed capital expenditures at $2.8 billion for the first six months of 2016, up $500 million on a sequential basis. Some $2 billion in cash went toward property, plant and equipment costs, down from $3.6 billion spent in the first quarter of fiscal 2016. Of particular interest is a substantial increase in land and building expenses, which now stands at $8.4 billion, up $1.4 billion from the September 2015 quarter.
Last quarter, Apple announced it plans to spend $15 billion over the course of 2016, with moneys going to "product tooling and manufacturing process equipment; data centers; corporate facilities and infrastructure, including information systems hardware, software and enhancements; and retail store facilities."
While the SEC filing did not offer clues as to specific R&D projects, Apple is thought to be pushing hard get its secret automotive offering off the ground. Referred to internally as "Project Titan," the initiative is said to involve over 1,000 employees including a small car lab operating out of in Berlin. Apple was rumored to be courting potential manufacturing partners in Germany, but the company reportedly hit a roadblock recently as talks with BMW and Daimler fell through.
The project is also facing trouble internally. AppleInsider exclusively reported that Apple executives instituted a hiring freeze in January following a sub-par team performance review, just after rumored project lead Steve Zadesky left the company. Titan could be back on track, however, as recent reports note the hires of a former Tesla engineer and prototyping specialists.
The location of Apple's forthcoming Cambridge R&D center in the U.K.
According to Apple's most recent regulatory filing, a total of $2.51 billion was spent on R&D operations during the three-month period ending in March, a figure up 31 percent from the same time last year. The outlay comes out to 5 percent of Apple's net sales for the quarter, a significant increase for a company that normally commits around 3 percent to R&D activities.
On a six-month basis, R&D costs hit $4.9 billion, or 3.9 percent of net sales for the period, up 29 percent from $3.8 billion and 2.9 percent of net sales in the year ago quarter. As in years past Apple said the spending escalation was fueled by an increase in hires and "related expenses," including compensation and material costs.
CEO Tim Cook during an investor conference call on Tuesday reconfirmed Apple's commitment to research and development, noting the acquisition of 15 companies over the past year whose assets will be rolled into future products and services.
In addition to R&D, Apple listed capital expenditures at $2.8 billion for the first six months of 2016, up $500 million on a sequential basis. Some $2 billion in cash went toward property, plant and equipment costs, down from $3.6 billion spent in the first quarter of fiscal 2016. Of particular interest is a substantial increase in land and building expenses, which now stands at $8.4 billion, up $1.4 billion from the September 2015 quarter.
Last quarter, Apple announced it plans to spend $15 billion over the course of 2016, with moneys going to "product tooling and manufacturing process equipment; data centers; corporate facilities and infrastructure, including information systems hardware, software and enhancements; and retail store facilities."
While the SEC filing did not offer clues as to specific R&D projects, Apple is thought to be pushing hard get its secret automotive offering off the ground. Referred to internally as "Project Titan," the initiative is said to involve over 1,000 employees including a small car lab operating out of in Berlin. Apple was rumored to be courting potential manufacturing partners in Germany, but the company reportedly hit a roadblock recently as talks with BMW and Daimler fell through.
The project is also facing trouble internally. AppleInsider exclusively reported that Apple executives instituted a hiring freeze in January following a sub-par team performance review, just after rumored project lead Steve Zadesky left the company. Titan could be back on track, however, as recent reports note the hires of a former Tesla engineer and prototyping specialists.
Comments
And it boggles the mind why Apple hasn't hired you to get things back on track... *rolls eyes*
It's so easy to dismiss their efforts without actually knowing all that goes into producing something.
Only Apple is expected to innovate. Maybe their next iPhone should be oval shaped.
the only thing that's changed since the first gen iPhone is the damn color!!!!!!111
http://www.radiofreemobile.com/apple-auto-titanic-task/
Also the growth of the iPhone was largely on Jobs' tenure from a few hundred thousand in its first Q to 40M in calendar Q4 2011. This last Q it was 50M. I know one of those was a Christmas and one wasn't but scale is scale.
Also iPads hit 15M that Q as opposed to 11 this last Q.
The idea that cook scaled up the company so that it is so much larger is a myth.
And over spending on R&D is a problem. A small team produced iOS and OS X for years, and the first iPhone and iPad. A much larger team has produced incremental improvements and the watch and tv OS, neither of the lat two have set the world on fire.
The other thing is the insinuation that the Apple Watch is a failure. Apple created an entire new line of business that generated $6B in revenue the first year. Exactly what world do people like you live in that consider this a problem?
What's next? The iRing?
Hypothetically, even if they had 20K employees making an average of $300K per year, the quarterly expense would be $1.5B. How do you mathematically even possibly spend $2.5B in R&D?
Jobs would rip this apart in 10 mins if he was still alive
Apple's spending on R&D has always been very restrained for the sector.
As far as software goes, the initial releases of iOS and OS X lacked so many of the features that exist now and ran on a smaller mix of hardware, so of course they would require smaller teams. Let's not forget the disasters that were .Mac and MobileMe, or not getting the first white iPhone out for a long time. As for watchOS and tvOS, they are selling at faster clips that the iPhone did year 1 and the previous Apple TV, respectively. Beyond that, we have no idea how large the software teams are. From speaking to the folks I know there, they still have relatively small teams and the watch team actually operates a bit independently.
If anything, I don't think we can even compare their efficiencies. Apple is a much larger company, with exponentially more customers, active devices and a larger product range that tailors to a broader range of people then when Jobs was alive. Most of that growth has been since Jobs passed.