Apple R&D nears $3B per quarter in Q3 as work on AR, autonomous systems continue

Posted:
in General Discussion edited August 2017
Apple spent nearly $3 billion on research and development in the third quarter of 2017, a $377 million year-over-year increase that brings the company's six-month outlay on future projects to more than $5.7 billion.




In a filing with the U.S. Securities and Exchange Commission published on Tuesday, Apple reported R&D spend at $2.94 billion, or more than 6.4 percent of quarterly net sales. The figure compares to $2.56 billion and just over 6 percent in the year ago quarter, meaning Apple is allocating a larger portion of net proceeds to the development of potential products.

As usual, official details of R&D investments went undisclosed, but Apple previously tied growth to new hires and related expenses. Tech companies, like other consumer sectors, traditionally expand R&D expenditures in lockstep with their respective product offerings, a necessary commitment for the stability of existing lines.

Apple's most recent quarter marks a slight bump in spending in relation to net sales, however, hinting that money is being funneled to new projects unrelated to product maintenance.

One such effort is the rumored "iPhone 8," which is anticipated to debut this fall as a standalone model distinct from expected updates to the iPhone 7 and iPhone 7 Plus. Set to be a flagship device, the next-generation handset is said to boast an all-new design with full-face OLED screen and advanced internal hardware like 3D-sensing cameras, wireless charging and, perhaps, under-screen Touch ID.

HomePod is another future product that received a bit of onstage time during Apple's Worldwide Developers Conference in June. The speaker accessory incorporates high-quality audio components, cutting edge acoustics, an A8 SoC and, most importantly, Siri virtual assistant technology into a svelte basket-like chassis.

Other potential areas of research were hinted at in today's investors conference call. CEO Tim Cook once again voiced Apple's intense interest in augmented reality applications, some of which are coming to fruition with ARKit in iOS 11. The Cupertino tech giant is betting big on AR, and delivered the set of developer tools last month in hopes of making a splash this fall.

"We believe AR has broad mainstream applicability across education, entertainment, interactive gaming, enterprise and categories we probably haven't even thought of," Cook said. "With hundreds of millions of people actively using iPhone and iPad today, iOS will become the world's biggest augmented reality platform as soon as iOS 11 ships."

Additionally, a new iMac Pro is slated for release in December, while a revamped Mac Pro and accompanying "pro display" should ship sometime next year.

Aside from formally announced products, Apple is known to be working on autonomous systems related to self-driving cars and other artificial intelligence applications. Apple's self-driving testbed was revealed in DMV documents in April, and the company's small fleet of Lexus hybrids has been spotted tooling around Silicon Valley.

As for other autonomous projects or possible consumer product plans, Apple and Cook are staying mum.

"We are very focused on autonomous systems from a core technology point of view, we do have a large project going and are making a big investment in this from our point of view. Autonomy is sort of the mother of all AI projects," Cook said today, echoing statements made last month. Autonomous systems can be used in a variety of ways and a vehicle is only one."

Not mentioned in today's conference call is rumored work on advanced health solutions related to a next-generation Apple Watch. Reports earlier this year claim Apple is working on a breakthrough noninvasive glucose sensor for tracking blood sugar levels in patients with diabetes, a system thought by many to be a "holy grail" of medicine.

Including R&D, Apple reported total operating expenses of $6.72 billion, or 15 percent of net sales, up from 14 percent during the same time last year.

Comments

  • Reply 1 of 14
    SoliSoli Posts: 10,033member
    That seems like a lot but in dollar value and percentage of net sales but it still considerably less than the companies Apple has the most competition. The following 2016 list has their competition at around 50% more than what Apple spends. I doubt that Apple is less efficient under Cook so I really do think there are some amazing product categories being reimagined.


    PS: Most surprising on that list is how comparably little Tesla spends. 
    edited August 2017 RacerhomieX
  • Reply 2 of 14
    jd_in_sbjd_in_sb Posts: 1,600member
    If Apple succeeds in eliminating the need for diabetics to draw blood samples that will send Apple Watch sales through the roof ... until Samsung and Chinese companies steal the IP and pump out similar products.
    schlackcaliwatto_cobrajony0
  • Reply 3 of 14
    jd_in_sb said:
    If Apple succeeds in eliminating the need for diabetics to draw blood samples that will send Apple Watch sales through the roof ... until Samsung and Chinese companies steal the IP and pump out similar products.
    "similar" in the loosest form possible. It might LOOK the same, it might claim to do the same thing but the quality, reliability and crucially; the user experience will differ vastly I bet. :)
  • Reply 4 of 14
    How much of the 3 billion was spent on Maps? Probably a very, very, very small percentage. It doesn't need a revamp; it needs more data!!
    RacerhomieXcali
  • Reply 5 of 14
    macxpressmacxpress Posts: 5,457member
    mindwaves said:
    How much of the 3 billion was spent on Maps? Probably a very, very, very small percentage. It doesn't need a revamp; it needs more data!!
    And its being worked on...this stuff doesn't happen overnight. We all like to compare Apple Maps to Google Maps, and we seem to forget that Google Maps had quite a head start on Apple. 

    Below is a link to where all of the Apple Maps vehicles are going. They were in my tiny city (can't believe they call this a city) just a couple of weeks ago. 

    https://maps.apple.com/vehicles/
    watto_cobra
  • Reply 6 of 14
    schlackschlack Posts: 711member
    Would be a very smart bet to build a generalized autonomy framework. Look at all the companies out there racing to build complete autonomy solutions. A MacOS/iOS/Ax chip based framework that removes the heavy lifting would be very powerful. Companies could focus on autonomy policy rather than the basics. Driving will only be one of many uses for autonomy. Apple's basically already doing the same with augmented reality right now.
    watto_cobra
  • Reply 7 of 14
    slurpyslurpy Posts: 5,362member
    mike54 said:
    Wifi routers gone, no new mac mini for 3 years, no redesigned or improved iMac, no new screen less mac or mac pro, iPods gone, AppleTV - its app store and its support stagnate, Mac App store stagnate, current mouse update was cheaply done, redesigned keyboard with no increase in functionality and features - a waste of effort...etc.

    Their various custom chip designs are very good though, and that takes plenty of R&D, and I hope they can break with Intel with it. But I'm sure some obvious things they should be able to improve though.
    And yet, they blew away expectations this quarter, and in previous quarters. Clearly, what you care about is not what most people care about, so stop pretending that Apple needs to follow your formula or else they're "not doing it right". Most of the things you just spouted are either false, misleading, or facile. The iMac was recently updated, along with a new Pro model,  a new Mac Pro is coming, iPod Nano and shuffle are obsolete deserve to be killed off, their mice and keyboard are fine, etc. 

    mindwaves said:
    How much of the 3 billion was spent on Maps? Probably a very, very, very small percentage. It doesn't need a revamp; it needs more data!!
    I use Apple maps every single day and it works brilliantly, and OFTEN gives me better data than Google maps, including more efficient navigation, more accurate business hours and status, etc. I have a massive grocery store by me, the opening hours on Google Maps have been wrong since it opened (2015), and Apple Maps is spot on, just one example. It's also superior with transit and mapping out subway stations, offering much more detail than Google Maps. Yes, sure it can always use more data but this is an ongoing process that can't be solved by dumping money at it. But the meme that Apple Maps "sucks" is outdated and absurd. To me, it has several advantages over Google Maps, including a more clear, intuitive, and faster interface.  
    edited August 2017 randominternetpersoncaliDon.Andersenwatto_cobrajony0
  • Reply 8 of 14
    macxpressmacxpress Posts: 5,457member
    Some are just so stuck on the fact that sure, Apple Maps had a really really bad initial start and I guess just assume Apple hasn't done much to improve them. Apple Maps is 1000x better than it was even just a couple years ago. Apple puts a TON of effort into Maps. Like I said, it will take time to get this. Maps aren't done overnight. Maybe its not great in your area, but it will be. It just takes time. There was a time when Google Maps sucked too. Sometimes, it still does in certain areas. 
    Don.Andersenwatto_cobra
  • Reply 9 of 14
    SpamSandwichSpamSandwich Posts: 33,407member
    schlack said:
    Would be a very smart bet to build a generalized autonomy framework. Look at all the companies out there racing to build complete autonomy solutions. A MacOS/iOS/Ax chip based framework that removes the heavy lifting would be very powerful. Companies could focus on autonomy policy rather than the basics. Driving will only be one of many uses for autonomy. Apple's basically already doing the same with augmented reality right now.
    I could see autonomy being built into electric wheelchairs, factory floor robots and other applications as well. 
  • Reply 10 of 14
    Soli said:
    That seems like a lot but in dollar value and percentage of net sales but it still considerably less than the companies Apple has the most competition. The following 2016 list has their competition at around 50% more than what Apple spends.
    Huh?

    According to your link, Apple's current R&D current spending rate is comparable to that of Samsung, Alphabet, Microsoft, Intel, and Amazon. Only Volkswagen spends (slightly) more.
  • Reply 11 of 14
    foggyhillfoggyhill Posts: 4,767member
    Soli said:
    That seems like a lot but in dollar value and percentage of net sales but it still considerably less than the companies Apple has the most competition. The following 2016 list has their competition at around 50% more than what Apple spends. I doubt that Apple is less efficient under Cook so I really do think there are some amazing product categories being reimagined.


    PS: Most surprising on that list is how comparably little Tesla spends. 
    If they continue spending 3B a quarter they'll be pretty much near the top since 12-13B seems to be were its at.

    Companies with a lot of infrastructure buildup like Amazon, Samsung and Volkswagen seems to lump their spendings in here... I think they should be elsewhere myself.
    In theory, all the money spent when revving up a new Fab, or a new plant process goes into development.

    Finding out about the Research part of R&D would be the most interesting part here I think.

    edited August 2017
  • Reply 12 of 14
    sirlance99sirlance99 Posts: 1,283member
    slurpy said:
    mike54 said:
    Wifi routers gone, no new mac mini for 3 years, no redesigned or improved iMac, no new screen less mac or mac pro, iPods gone, AppleTV - its app store and its support stagnate, Mac App store stagnate, current mouse update was cheaply done, redesigned keyboard with no increase in functionality and features - a waste of effort...etc.

    Their various custom chip designs are very good though, and that takes plenty of R&D, and I hope they can break with Intel with it. But I'm sure some obvious things they should be able to improve though.
    And yet, they blew away expectations this quarter, and in previous quarters. Clearly, what you care about is not what most people care about, so stop pretending that Apple needs to follow your formula or else they're "not doing it right". Most of the things you just spouted are either false, misleading, or facile. The iMac was recently updated, along with a new Pro model,  a new Mac Pro is coming, iPod Nano and shuffle are obsolete deserve to be killed off, their mice and keyboard are fine, etc. 

    mindwaves said:
    How much of the 3 billion was spent on Maps? Probably a very, very, very small percentage. It doesn't need a revamp; it needs more data!!
    I use Apple maps every single day and it works brilliantly, and OFTEN gives me better data than Google maps, including more efficient navigation, more accurate business hours and status, etc. I have a massive grocery store by me, the opening hours on Google Maps have been wrong since it opened (2015), and Apple Maps is spot on, just one example. It's also superior with transit and mapping out subway stations, offering much more detail than Google Maps. Yes, sure it can always use more data but this is an ongoing process that can't be solved by dumping money at it. But the meme that Apple Maps "sucks" is outdated and absurd. To me, it has several advantages over Google Maps, including a more clear, intuitive, and faster interface.  
    I use both Apple and Google maps everyday and Google works BRILLIANTLY. Yet I have Apple Maps take me to a street that’s been closed for years and Google navigates around it BRILLIANTLY. Google Maps more often give me BETTER directions than Apple Maps. See, it works both ways. 

    And Apple didn’t “BLEW AWAY” expectations, they just beat them. 
    edited August 2017
  • Reply 13 of 14
    SoliSoli Posts: 10,033member
    Soli said:
    That seems like a lot but in dollar value and percentage of net sales but it still considerably less than the companies Apple has the most competition. The following 2016 list has their competition at around 50% more than what Apple spends.
    Huh?

    According to your link, Apple's current R&D current spending rate is comparable to that of Samsung, Alphabet, Microsoft, Intel, and Amazon. Only Volkswagen spends (slightly) more.
    According to my link, Apple's primary competitors were spending around $12B while Apple is spend around $8B in 2016.

    I'm not comparing Apple's 2017 with everyone else from 2016. That makes no sense. We'll have to wait until 2018 to see what the results are for everyone in 2017 or if you want to scour the internet for the quarter reports of the aforementioned companies to see if they state their R&D we can then extrapolate what they're all likely doing for calendar year 2017.
    edited August 2017
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