Apple R&D spend increases to 7 percent ahead of expected big fall launch cycle

Posted:
in AAPL Investors edited July 2018
Apple's capital outlay for research and development operations continued to balloon in its third fiscal quarter of 2018, with the company spending $3.7 billion on future products and services, up $760 million year-over-year.

2018 Apple Product Pipeline


The tech giant revealed the latest uptick in R&D spend in a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday, which served as record of the company's record-breaking June quarter.

Apple's allotment represents 7 percent of the company's $53.3 billion in net sales for the period. The figure is up from $3.4 billion Apple earmarked for future projects over the course of its second fiscal quarter and well ahead of last year's third quarter outlay of $2.94 billion.

Apple typically allots between 4 percent and 5 percent of a quarter's net sales to R&D, leaving the 7 percent spent during the most recent quarter as somewhat of an outlier. During the same time last year, a quarter prior to the unveiling of iPhone 8 and iPhone X, the company put 6.4 percent toward such expenditures.

In any case, Apple's spending on R&D is steadily increasing as rumors of new products swirl.

Apple is widely rumored to launch three new iPhone models later this year, two of which will boast OLED screens. A follow-up to the current 5.8-inch iPhone X is expected, as is a new jumbo-size 6.5-inch "iPhone X Plus." An LCD-equipped 6.1-inch model is rumored to anchor Apple's fall lineup, with the mid-tier handset supposedly set to debut in a range of chassis colors including yellow, orange and blue.

Earlier this week, a pair of dummy iPhone models popped up online, offering what could be the first look at Apple's 6.1- and 6.5-inch smartphones.

In addition to iPhone, Apple is widely anticipated to launch revamped iPad Pro products sometime this year. The company's flagship tablet line has not been updated since its release at WWDC 2017 more than a year ago.

Face ID technology is expected for inclusion in this year's iPad Pro refresh, which could see a slight redesign that swaps out the current Touch ID home button to make room for an 11-inch edge-to-edge display on the smaller model. Rumors shared this week suggest Apple will drop the headphone jack and relocate the Smart Connector to accommodate both landscape and portrait use.

Apple's wearables are due for an upgrade this fall. According to analyst Ming-Chi Kuo, Apple Watch will benefit from larger screens -- and potentially larger frames -- with enhanced heart monitoring functionality and extended battery life. Next-generation AirPods and a high-end over-the-ear headphone are also in the works, though a release date for the latter is not expected until late 2018 or early 2019.

New Macs are also in the offing, including a revamped iMac and -- much to joy of many -- Mac mini.

Further out in Apple's alleged product pipeline is an augmented/virtual reality headset that could see the light of day in 2020. Referred to internally as "T288," the device supposedly integrates two 8K displays, a separate computing unit connected via WiGig 2.0 or 802.11ay, and Siri voice control. Apple is also said to be working on health-monitoring technologies like a glucose sensor for Apple Watch and a smaller HomePod speaker.

Also in development is self-driving car technology spawned from Apple's defunct "Project Titan" initiative. The company is currently testing the tech in a fleet of 66 autonomous vehicles driving on California roads, with reports claiming the solution will ultimately end up in a self-driving shuttle that ferries employees between Apple campuses.

Including R&D, Apple reported total operating expenses of $7.8 billion, or 15 percent of net sales.

Comments

  • Reply 1 of 20
    mike54mike54 Posts: 347member
    How much R&D money do they need to make up-to-date affordable headless mac?
    elijahgElCapitanavon b7[Deleted User]jcs2305
  • Reply 2 of 20
    FolioFolio Posts: 597member
    It might also be relevant that the footnote contained in Apple's SEC filing stated that of the $3.7 B in R&D spend for the quarter, $675M went to "share-based compensation expense." All good-- lots of carrots for the researchers, engineers, scientists, and so on.
    watto_cobra
  • Reply 3 of 20
    polymniapolymnia Posts: 932member
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    None. Intel has you covered with the NUC. 

    If, on the other hand, you want a Mac, you’ll be waiting until they integrate a T2 chip, maybe make the whole thing ARM, and probably engineer something totally gratuitous, yet amazing. And it likely won’t be affordable to the bottom-feeding market for headless Macs who are continuously (and amusingly) disappointed in the lack of concern Apple has for their plight. 
    tmayorthiconwelshdogpaisleydiscoRayz2016racerhomie3StrangeDaysJWSCwatto_cobrajony0
  • Reply 4 of 20
    foggyhillfoggyhill Posts: 4,767member
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    Apple has NEVER made an "affordable" (sic) Mac... Inflation adjusted numbers support me all the way on this.

    If anything, in the last 15 years, Apple has sold much more "affordable" products than before, mostly by still selling and supporting older models
    tmaywatto_cobra
  • Reply 5 of 20
    duervoduervo Posts: 70member
    In any event, my choice this fall will be one of the following:

    1. New Mac mini (I’d be surprised if this happens)
    2. New MacBook Air (or whatever they release in that space, if anything,) or
    3. LGA-2066 CPU to go into an X299 motherboard that I recently got for free. Probably an i9-7920X.

    Right now, option 3 seems to be most likely.
  • Reply 6 of 20
    Does Apple fund much fundamental research or is mostly product development?
    watto_cobra
  • Reply 7 of 20
    matrix077matrix077 Posts: 728member
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    Don’t we just recently have rumor about Mac mini update? 

    But then again I just swapped my 2012 Mac mini HDD to SSD a few months ago & expect to use it for another 3 years at least. 
    watto_cobra
  • Reply 8 of 20
    ElCapitanElCapitan Posts: 263member
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    It would take just about ZERO R&D to get an i7quad core back in the Mini chassis.
    edited August 2018 avon b7JWSC
  • Reply 9 of 20
    Rayz2016Rayz2016 Posts: 4,726member
    duervo said:
    In any event, my choice this fall will be one of the following:

    1. New Mac mini (I’d be surprised if this happens)
    2. New MacBook Air (or whatever they release in that space, if anything,) or
    3. LGA-2066 CPU to go into an X299 motherboard that I recently got for free. Probably an i9-7920X.

    Right now, option 3 seems to be most likely.
    Don’t wait. Go for it.
    tmayStrangeDayswatto_cobra
  • Reply 10 of 20
    ElCapitan said:
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    It would take just about ZERO R&D to get an i7 back in the Mini chassis.
    You must be wanting something besides i7...i7 has been available since 2011. Do you mean quad-core?
    watto_cobra
  • Reply 11 of 20
    shevshev Posts: 81member
    Holding tight waiting for an updated watch design, might finally take the plunge on one 
    watto_cobra
  • Reply 12 of 20
    ElCapitanElCapitan Posts: 263member
    ElCapitan said:
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    It would take just about ZERO R&D to get an i7 back in the Mini chassis.
    You must be wanting something besides i7...i7 has been available since 2011. Do you mean quad-core?
    Yeah, quad core i7, like they used to have back in 2012 (of which I have multiple machines that needs to be upgraded any day now...)
    watto_cobra
  • Reply 13 of 20
    asciiascii Posts: 5,941member
    R&D successes don't have to be amazing things, just look at the AirPods.

    I was thinking Apple could leverage their good reputation for security and privacy by releasing a door lock that you open with your phone.
    watto_cobra
  • Reply 14 of 20
    The increase in R&D is to port mac os and mac apps to ARM; macs will continue to ship with intel processors for non-os applications (eg microsoft stuff, windozzzz).

    Increasing spending on R&D now means there's something cooking for 2020-21 (2-3 years out). That's in-line with other rumors for porting macs over to ARM... we're already seeing it with the T2 and probably the T2 (or next year's T3) will "secretly" be powerful enough to run the 2020 arm mac os so that the 2021 transition will work on an installed base.  ...but it takes a lot of r&d $$$ to make that happen.
    watto_cobra
  • Reply 15 of 20
    irelandireland Posts: 17,649member
    What if the new iPad Pros have two Smart Connectors; one for each orientation.

    Also, if HomePod is $349 and Apple do produce HomePod mini in the next two or three years, I wonder what price it might be. I expect it should cost $99, so after I put that figure through my bizarre-o Apple price calculator, that means the cheapest it’ll be is $199.
    edited August 2018
  • Reply 16 of 20
    ElCapitan said:
    ElCapitan said:
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    It would take just about ZERO R&D to get an i7 back in the Mini chassis.
    You must be wanting something besides i7...i7 has been available since 2011. Do you mean quad-core?
    Yeah, quad core i7, like they used to have back in 2012 (of which I have multiple machines that needs to be upgraded any day now...)
    We’ll you in luck, because Intel finally released a quad-core 28W CPU with Iris Graphics. The same CPUs that allowed the 13” MBP to go quad will allow the mini to go quad (again). 
    edited August 2018 watto_cobra
  • Reply 17 of 20
    ireland said:
    What if the new iPad Pros have two Smart Connectors; one for each orientation.

    Also, if HomePod is $349 and Apple do produce HomePod mini in the next two or three years, I wonder what price it might be. I expect it should cost $99, so after I put that figure through my bizarre-o Apple price calculator, that means the cheapest it’ll be is $199.
    The current HomePod is estimated to cost $216 so at $349 margins already suck. To sell for $99 they’d have to get costs down to $40. 

    In other words, a $99 HomePod won’t happen. 
    Cesar Battistini MazieroStrangeDayswatto_cobra
  • Reply 18 of 20
    FolioFolio Posts: 597member
    Good article on India smartphone market and Samsung R&D center innovation there (nothing on Apple directly):

    "Its Galaxy J6 launched in May and the J8 sold from July have been doing especially well, each selling 50,000 a day, says Samsung. In an appeal to millennials, the phones have a new “chat over video” feature which allows users to view videos without interruption even as they chat by text due to a transparent keyboard. 

    To be sure, Samsung has long dominated the premium end of the smartphone market in India and features like “chat over video”, designed at its Indian R&D center, underscore its tech prowess. It has also built up a wide retail network in the country."

    https://www.reuters.com/article/us-samsung-elec-smartphones-india-focus/samsung-borrows-from-chinese-playbook-in-battle-for-indias-smartphone-market-idUSKBN1KM4XY?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+reuters/businessNews+(Business+News)

  • Reply 19 of 20
    StrangeDaysStrangeDays Posts: 8,274member
    mike54 said:
    How much R&D money do they need to make up-to-date affordable headless mac?
    The mini is the very bottom entry level mac. My parents used it as switchers. If you need something more, it’s iMac or Pro for you.
    edited August 2018 watto_cobra
  • Reply 20 of 20
    StrangeDaysStrangeDays Posts: 8,274member
    ascii said:
    R&D successes don't have to be amazing things, just look at the AirPods.

    I was thinking Apple could leverage their good reputation for security and privacy by releasing a door lock that you open with your phone.
    These products already exist in the ecosystem, I don’t expect to see Apple create a new accessory for that use case.
    PickUrPoison
Sign In or Register to comment.