Apple spent record $1.7B on research & development last quarter, $6B in fiscal 2014

Posted:
in Future Apple Hardware edited November 2014
Apple's spending on research and development grew 35 percent to more than $6 billion in fiscal 2014, setting a new record as the company gears up for future products like the Apple Watch and beyond.

Apple HQ


With $6.04 billion spent in fiscal 2014, Apple invested a record $1.68 billion into R&D in the September quarter alone. That was slightly higher than the previous record of $1.6 billion spent in the preceding June quarter.

Though total R&D spending grew 35 percent from the $4.48 billion Apple spent in fiscal 2013, research investments remained at 3 percent of the company's percentage of total net sales. In contrast, just 2 percent of total net sales, or $3.38 billion, was spent on research and development in fiscal 2012.




Apple's spending, revealed in its latest 10-K filing with the U.S. Securities and Exchange Commission, was primarily driven by an increase in headcount and related expenses. Apple said those expenses included share-based compensation costs, as well as machinery and equipment to support the company's expanded R&D.

"The Company continues to believe that focused investments in R&D are critical to its future growth and competition 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," the filing reads. "As such, the Company expects to make further investments in R&D to remain competitive."

Though Apple is usually tight-lipped about future product plans, the company did tip its hand on an entirely new product category last month, revealing the forthcoming Apple Watch. Final specifications and details on the Apple Watch remain unknown, because the wrist-worn device remains in development ahead of an early 2015 launch.
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Comments

  • Reply 1 of 86
    gtrgtr Posts: 3,231member
    Why?

    Weren't they doomed?
  • Reply 2 of 86
    gtr wrote: »
    Why?

    Weren't they doomed?

    They're still doomed. The rising amount of R/D spend clearly indicates a death spiral. /s
  • Reply 3 of 86
    schlackschlack Posts: 719member
    that's a tiny amount of R&D as a percentage of sales, considering that this is their innovation engine.
  • Reply 4 of 86
    MacProMacPro Posts: 19,718member
    schlack wrote: »
    that's a tiny amount of R&D as a percentage of sales, considering that this is their innovation engine.

    Agreed and focussed like a rifle. I far prefer Apple's approach than the almost crazy scatter gun approach of Google. Google seems to throw so much at the wall to see what sticks it makes me wonder if they have any actual vision aside from their core business, oh and stealing Apple's iPhone concepts of course.
  • Reply 5 of 86

    I just priced online a new 5K iMac for my wife ($3K) and think it's pretty incredible that Apple as kept its pricing about the same for their top of the line machines for many years. We upgrade for the incremental speed boosts and OS compatibility, and the new machines are the best Macs we've ever owned over a span of nearly 30 years.

     

    I consider Apple's R&D spending entirely appropriate, as I appreciate the continual improvements in performance and aesthetics. As beautiful as my current 27" display has been on this 2013 iMac, I can't wait to see the new display, and see Yosemite running on it.

     

    The so-called "Apple Tax" is not a tax, and Apple's pricing is not only fair, it's a bit of assurance that they are continuing to improve their product offerings. This, among many other reasons, keeps me a loyal and happy Apple customer.

     

    Steve picked a good successor, and I'm proud of Tim and his Apple team.

  • Reply 6 of 86
    Quote:

    Originally Posted by DanielSW View Post

     

    Steve picked a good successor, and I'm proud of Tim and his Apple team.


    Well said.

  • Reply 7 of 86
    asciiascii Posts: 5,936member

    I'm looking forward to the iMac with quantum co-processor.

  • Reply 8 of 86
    inklinginkling Posts: 768member
    I wish Apple would spend a little of that huge sum fixing the absolutely dreadful HunSpell dictionary/spell checker in OS X. It illustrates that open source can mean that what's everyone's responsibility is no one's responsibility%u2014the 'Problem of the Commons.' I'm continually amazed by:

    1. How many words aren't in the dictionary. Add a common prefix or suffix to a word to create a perfectly legitimate word and it flags it as misspelled.

    2. How awful the spelling suggestions are. Leave out one letter or flip two letters and it is lost. About a third of the time it has no suggestions. Paste that same misspelled word into a Google search and the result is a correct 'did you mean' about 98% of the time. If Apple isn't going to give us a decent spell-checker, it should at least offer a 'Check spelling with Google' option. Google knows how to spell. Apple hasn't a clue.

    3. The handling of hyphens in HunSpell is awful. Give it a word that may or may not be hyphenated, and it'll make up all sorts of utterly weird hyphenated options. Users are left wondering if: a. the word without hyphenation is fine but this spell-checker's vocabulary is defective. b. the word is hyphenated as the spell checker is claiming or c. the spell checker is just making up words by adding hyphens between two legitimate words.

    It's easy to suspect that, as its name hints, HunSpell was designed for Hungarian and does poorly with the larger vocabulary and more complex word-formation of English.

    Each of those failings takes time and taken together, they consume a lot of time for those who're doing real work on their Macs rather than just composing terse messages made up short words.

    For the latest OS X upgrade, Apple spent huge sums offering users the ability to leave an email being written on their iPhone and take it up on their Mac. There was nothing wrong with that. That may help a few people occasionally.

    But they'd do all iOS and OS X users an enormous favor if they're improve the spell checker people are using to write that email so it isn't a time-consuming piece of junk. It'd save a lot more time and it'd benefit every user in every situation.

    There's a host of ways spell-checkers could be improved.

    * Larger vocabularies.
    * Better lookup.
    * No bogus, made up words.
    * Some indication, where their are two spellings, of which is preferred.

    And yes, that would require a lot of work. But Apple wouldn't have to create that information. It could buy it from a capable source.

    I remember what spell-checkers were like in the late 1980s, a quarter of a century ago, and they've not improved one bit since then. HunSpell is actually worse than some. Apple needs form an alliance with others who use HunSpell (i.e. Adobe) and make it worth having.
  • Reply 9 of 86
    inkling wrote: »
    I wish Apple would spend a little of that huge sum fixing the absolutely dreadful HunSpell dictionary/spell checker in OS X. It illustrates that open source can mean that what's everyone's responsibility is no one's responsibility%u2014the 'Problem of the Commons.' I'm continually amazed by:

    1. How many words aren't in the dictionary. Add a common prefix or suffix to a word to create a perfectly legitimate word and it flags it as misspelled.

    2. How awful the spelling suggestions are. Leave out one letter or flip two letters and it is lost. About a third of the time it has no suggestions. Paste that same misspelled word into a Google search and the result is a correct 'did you mean' about 98% of the time. If Apple isn't going to give us a decent spell-checker, it should at least offer a 'Check spelling with Google' option. Google knows how to spell. Apple hasn't a clue.

    3. The handling of hyphens in HunSpell is awful. Give it a word that may or may not be hyphenated, and it'll make up all sorts of utterly weird hyphenated options. Users are left wondering if: a. the word without hyphenation is fine but this spell-checker's vocabulary is defective. b. the word is hyphenated as the spell checker is claiming or c. the spell checker is just making up words by adding hyphens between two legitimate words.

    It's easy to suspect that, as its name hints, HunSpell was designed for Hungarian and does poorly with the larger vocabulary and more complex word-formation of English.

    Each of those failings takes time and taken together, they consume a lot of time for those who're doing real work on their Macs rather than just composing terse messages made up short words.

    For the latest OS X upgrade, Apple spent huge sums offering users the ability to leave an email being written on their iPhone and take it up on their Mac. There was nothing wrong with that. That may help a few people occasionally.

    But they'd do all iOS and OS X users an enormous favor if they're improve the spell checker people are using to write that email so it isn't a time-consuming piece of junk. It'd save a lot more time and it'd benefit every user in every situation.

    There's a host of ways spell-checkers could be improved.

    * Larger vocabularies.
    * Better lookup.
    * No bogus, made up words.
    * Some indication, where their are two spellings, of which is preferred.

    And yes, that would require a lot of work. But Apple wouldn't have to create that information. It could buy it from a capable source.

    I remember what spell-checkers were like in the late 1980s, a quarter of a century ago, and they've not improved one bit since then. HunSpell is actually worse than some. Apple needs form an alliance with others who use HunSpell (i.e. Adobe) and make it worth having.

    Or...learn how to spell. I've never noticed the spell check to be lacking.
  • Reply 10 of 86
    melgrossmelgross Posts: 33,510member
    schlack wrote: »
    that's a tiny amount of R&D as a percentage of sales, considering that this is their innovation engine.

    No, it's a lot, no matter how you look at it. Smaller companies that are technological in nature need to spend a large percentage of their sales on R&D because there needs to be a minimum spent to come up with new products. For example, when Hp was still mainly a test and measurement company, and much smaller, they used to note, every year, in their large, hard bound, catalogs, that they spent between 10-11% of sales on R&D. But they were a small company, by today's standards.

    As a company gets larger, R&D costs don't ramp up. If they did, then Apple would have spent over $18 billion on R&D. What would they have spent all that money on?
  • Reply 11 of 86
    melgrossmelgross Posts: 33,510member
    inkling wrote: »
    I wish Apple would spend a little of that huge sum fixing the absolutely dreadful HunSpell dictionary/spell checker in OS X. It illustrates that open source can mean that what's everyone's responsibility is no one's responsibility%u2014the 'Problem of the Commons.' I'm continually amazed by:

    1. How many words aren't in the dictionary. Add a common prefix or suffix to a word to create a perfectly legitimate word and it flags it as misspelled.

    2. How awful the spelling suggestions are. Leave out one letter or flip two letters and it is lost. About a third of the time it has no suggestions. Paste that same misspelled word into a Google search and the result is a correct 'did you mean' about 98% of the time. If Apple isn't going to give us a decent spell-checker, it should at least offer a 'Check spelling with Google' option. Google knows how to spell. Apple hasn't a clue.

    3. The handling of hyphens in HunSpell is awful. Give it a word that may or may not be hyphenated, and it'll make up all sorts of utterly weird hyphenated options. Users are left wondering if: a. the word without hyphenation is fine but this spell-checker's vocabulary is defective. b. the word is hyphenated as the spell checker is claiming or c. the spell checker is just making up words by adding hyphens between two legitimate words.

    It's easy to suspect that, as its name hints, HunSpell was designed for Hungarian and does poorly with the larger vocabulary and more complex word-formation of English.

    Each of those failings takes time and taken together, they consume a lot of time for those who're doing real work on their Macs rather than just composing terse messages made up short words.

    For the latest OS X upgrade, Apple spent huge sums offering users the ability to leave an email being written on their iPhone and take it up on their Mac. There was nothing wrong with that. That may help a few people occasionally.

    But they'd do all iOS and OS X users an enormous favor if they're improve the spell checker people are using to write that email so it isn't a time-consuming piece of junk. It'd save a lot more time and it'd benefit every user in every situation.

    There's a host of ways spell-checkers could be improved.

    * Larger vocabularies.
    * Better lookup.
    * No bogus, made up words.
    * Some indication, where their are two spellings, of which is preferred.

    And yes, that would require a lot of work. But Apple wouldn't have to create that information. It could buy it from a capable source.

    I remember what spell-checkers were like in the late 1980s, a quarter of a century ago, and they've not improved one bit since then. HunSpell is actually worse than some. Apple needs form an alliance with others who use HunSpell (i.e. Adobe) and make it worth having.

    I can't say I've had a major problem with it, but you can just add words to the dictionary, as you can with most other spell checkers. Spell checking is a difficult thing. Until true AI is here it's not going to be able to guess what word you're looking for all the time. And it's well known that creating a spell check dictionary is an art, not a science. The problem with those that have dictionaries that are too extensive, is that as they get larger, the worse the checker is. That's why they haven't seemed to have gotten much better over the years. You need multiple dictionaries you can switch to depending on what you're writing about.
  • Reply 12 of 86

    It boggles my mind that Apple has not released a new Apple TV with an improved remote and App Store.  Even if they can't strike a deal with the cable companies, there is huge potential for Apple to make more of an impact in people's living room.  That market is ripe for the taking and app developers will figure out how to make people want it, stop stalling and spend that R&D on something that has huge potential!  

  • Reply 13 of 86
    Quote:

    Originally Posted by digitalclips View Post





    Agreed and focussed like a rifle. I far prefer Apple's approach than the almost crazy scatter gun approach of Google. Google seems to throw so much at the wall to see what sticks it makes me wonder if they have any actual vision aside from their core business, oh and stealing Apple's iPhone concepts of course.

     

    True, as Google's running around $2.5B/quarter in R&D. I don't think that anyone would dispute a corporate culture difference between Apple and Google though. Seeing what sticks is a valid approach, even though it's less efficient. It's certainly more fun.

  • Reply 14 of 86
    Agreed and focussed like a rifle. I far prefer Apple's approach than the almost crazy scatter gun approach of Google. Google seems to throw so much at the wall to see what sticks it makes me wonder if they have any actual vision aside from their core business, oh and stealing Apple's iPhone concepts of course.

    Google's Nexus Q was entirely their own concept.
    Whatever happened to that ?
  • Reply 15 of 86
    asciiascii Posts: 5,936member

    There are fundamental problems in computer science they could be researching. Programming languages are still pretty primitive. Computer security is a big problem. And Microsoft and IBM are spending big on quantum processors now. Apple is kicking butt with the A8 but they need to keep an eye out for any fundamental advances that could come out of left field and turn the market on it's head.

  • Reply 16 of 86
    gatorguygatorguy Posts: 24,176member
    True, as Google's running around $2.5B/quarter in R&D. I don't think that anyone would dispute a corporate culture difference between Apple and Google though. Seeing what sticks is a valid approach, even though it's less efficient. It's certainly more fun.
    There must be a points bonus for being the first to mention Google in an Apple-specific thread. No better way to throw the discussion off in another direction I suppose :\
  • Reply 17 of 86
    Quote:

    Originally Posted by Gatorguy View Post





    There must be a points bonus for being the first to mention Google in an Apple-specific thread. No better way to throw the discussion off in another direction I suppose image

     

    Well, at least I didn't start it :P

  • Reply 18 of 86
    welshdogwelshdog Posts: 1,897member
    Quote:

    Originally Posted by digitalclips View Post





    Agreed and focussed like a rifle. I far prefer Apple's approach than the almost crazy scatter gun approach of Google. Google seems to throw so much at the wall to see what sticks it makes me wonder if they have any actual vision aside from their core business, oh and stealing Apple's iPhone concepts of course.



    Samsung seems to use the same approach - "let's invent a 1000 new things and maybe one of them will be good."

    I'm old, so I remember the scene from The Odd Couple where Felix throws the plate of linguini onto the wall and pronounces "Now it's garbage."  Apropos for too many tech companies these days.

  • Reply 19 of 86
    rogifanrogifan Posts: 10,669member
    I see Apple stock is at another all time high. How high would it need to go to best Microsoft's record market cap (adjusted for inflation) from late 90s early 2000?
  • Reply 20 of 86
    paxmanpaxman Posts: 4,729member
    Quote:

    Originally Posted by TheWhiteFalcon View Post



    Or...learn how to spell. I've never noticed the spell check to be lacking.

    Oh, its lacking, all right. And using a spell checker / dictionary / thesaurus is a great way to improve one's spelling and vocabulary.

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