Dell tops Apple in R&D
This scares me. Dell spends more dollars on R&D than Apple and comes up with...nothing?
3,600 folks to build some crappy win-boxes and som desent servers?
http://www.macminute.com/2003/11/21/dell
3,600 folks to build some crappy win-boxes and som desent servers?
Quote:
From Macminute.com
Dell tops Apple in R&D
November 21 - 11:01 EST__ Dell Computer CEO Michael Dell recently said that his company's research and development (R&D) division is very comparable to that of Apple. In fact, Dell has more workers and spends more money than Apple in R&D, despite being known for rebranding products and using many OEM parts. "We have 3,600 folks in our R&D division and spend half a billion dollars a year, similar to the amount Apple spends," Dell said. "Just because we sell a whole lot more doesn't mean we're bad. I thought that was part of the objective." Apple says it currently has 2,500 employees working in R&D, and spent $471 million in R&D costs in fiscal 2003.
From Macminute.com
Dell tops Apple in R&D
November 21 - 11:01 EST__ Dell Computer CEO Michael Dell recently said that his company's research and development (R&D) division is very comparable to that of Apple. In fact, Dell has more workers and spends more money than Apple in R&D, despite being known for rebranding products and using many OEM parts. "We have 3,600 folks in our R&D division and spend half a billion dollars a year, similar to the amount Apple spends," Dell said. "Just because we sell a whole lot more doesn't mean we're bad. I thought that was part of the objective." Apple says it currently has 2,500 employees working in R&D, and spent $471 million in R&D costs in fiscal 2003.
http://www.macminute.com/2003/11/21/dell
Comments
Originally posted by Zadak
This scares me. Dell spends more dollars on R&D than Apple and comes up with...nothing?
3,600 folks to build some crappy win-boxes and som desent servers?
I read another article about Dell's R&D once before. A good chunk of that R&D actually goes into streamlining the manufacturing process and finding cheaper solutions. That's why he says there's a high profit return on R&D.
Apple, on the other hand, has to use its R&D for Mac OS X, software, hardware, and other cool technologies. Quite the difference.
Originally posted by Brad
I read another article about Dell's R&D once before. A good chunk of that R&D actually goes into streamlining the manufacturing process and finding cheaper solutions. That's why he says there's a high profit return on R&D.
Apple, on the other hand, has to use its R&D for Mac OS X, software, hardware, and other cool technologies. Quite the difference.
I agree. And I noticed that they used Apple in their statement, when they could have said "HP" or "Alienware". That just proves that they're jealous of Apple
Originally posted by Brad
I read another article about Dell's R&D once before. A good chunk of that R&D actually goes into streamlining the manufacturing process and finding cheaper solutions. That's why he says there's a high profit return on R&D.
Apple, on the other hand, has to use its R&D for Mac OS X, software, hardware, and other cool technologies. Quite the difference.
plus dell has a much higher gross revenue, so put into percentages dell doesn't spend as much as apple.
Originally posted by Placebo
I agree. And I noticed that they used Apple in their statement, when they could have said "HP" or "Alienware". That just proves that they're jealous of Apple
Could they have said HP? I know HP does some awesome stuff, I would their think R&D is higher then Apples by a lot.
Originally posted by superkarate monkeydeathcar
plus dell has a much higher gross revenue, so put into percentages dell doesn't spend as much as apple.
yea. the first thing i thought, is what percentage do they work out to. dell's market cap: 88.5B. apple's: 7.4B. Dell spends a similar dollar amount to apple, despite being >10x their size.
Originally posted by ast3r3x
Could they have said HP? I know HP does some awesome stuff, I would their think R&D is higher then Apples by a lot.
You mean higher than Dell's?
The only real area of interest is the specific qualities of the research that those dollars are buying, none of it excuses or indicts the pricing practices of either company, just in case some people wanted to lean that way. 100 bucks one way or another won't seal the deal, where Apple runs into trouble is when they are a few hundred too high, or a few too many specs short (Mhz, RAM, HDD, display, etc etc) at the same prices.
To me it seems that it's been a while since Dell has had the best deals going, either in terms of features/price, unless you mine the extensive promos/coupons on Dell's pages. I guess it's something of a mass market rebate actuarial model. The deals are there, but many buyers won't know to find them and Dell won't exactly point them out to you. Still, when you're careful and string together a promo/coupon with one of their free-shipping deals, you can still get a great deal on a very reliable machine.
Overall, for features at the price, a friendly set-up, and excellent reliability, I'd say that HP/Compaq offers the best retail PC offerings. They're really quite good, come with plenty of RAM, HDD space, good GPU's, very nice LCD's, and extras like all-in-one card readers and all-in-one printer-fax-scanner units.
Apple's R&D buys a different experience, but even Apple could learn a thing or two from Dell about increasing production efficiency.
Originally posted by Matsu
Apple's R&D buys a different experience, but even Apple could learn a thing or two from Dell about increasing production efficiency.
At what cost?
You know why so many Dell hard drives fail? Because they tell the OEMs they buy from to hold their purchases to a lower QC standard, so the yields are higher and they're cheaper. But the drive you get - despite the common model number - isn't as good as WD or Maxtor will sell directly to a customer under their own name, for example. It's a lot like the difference between generic RAM and name-brand RAM. They're often made in the same plants on the same processes; but the latter goes through a lot of extra QC, raising the price and limiting the availability.
GPUs - again, within a given model number - are also highly customizable. What do you keep? What do you leave out? The retail GPUs, of course, are packed full of features. OEM GPUs are almost always worse within a given line. Why? Cost.
Another possibility: How far do you go in letting manufacturability determine design? How much do you automate QC to save costs?
Frankly, I'd be surprised if Apple isn't pretty close to Dell operationally. They do have one of the best in the business - Tim Cook, hired from Compaq - running that side of things, and Steve actually told the analysts that Apple met or beat Dell on logistics. But they probably have a different set of priorities. I've never seen a Dell desktop built like an iMac, and I've certainly never seen a Dell notebook built anything like any kind of Apple notebook.
Originally posted by thuh Freak
yea. the first thing i thought, is what percentage do they work out to. dell's market cap: 88.5B. apple's: 7.4B. Dell spends a similar dollar amount to apple, despite being >10x their size.
and what do they each have to show for it? maybe dell should rethink this investment.
Each philosophy has potential drawbacks. Dell's is something like honing a parts bin assembly -- playing with component compatibility almost as if they were tweaking tolerances. At it's best it yields a reliable machine at a great price. But then you hit a wall, there's anly so much you can get from optimizing the assembly of other people's parts without more concrete contributions of your own. Groupthink sets in, and rather than look to invest product with a contribution of your own making, you try and get more from the formula you've been using -- you take it past reasonable limits, inertia sets in and you do something stupid like skimp on HDD reliability***
*** though from Dell's perspective that isn't that bad for a corporate client in a large install. Any competent IT chief will have that terminals HDD yanked and replaced with a mirror image (just like that of the other 995 Dells) within 20 minutes. Since a big company has to pay an IT staff anyway, they might as well take their chances and get the up front savings. This all has limits though, and the same scenario would be nothing short of a disaster for the average home user.
Apple runs the same risk from the other side. With a lot of time invested working out "look and feel" ergos, interfaces, and all that cool stuff (And it is very cool, full credit to them) they sometimes miss their mark. The case of whether or not the iMac dome/arm assembly can be built down to a more consumer-friendly price springs to mind. And while the formula has hit a sweet spot with laptops, the consumer desktop has suffered more often than not, lately. Pro desktops depend on other issues and we'll leave them be.
Taken to their extremes, Dell will end up with cheap stuff that people will buy only to discover it's cheap, and Apple will end up with great stuff that people can't buy to find out how great it is. Both problems if, in the future, you hope to sell those people either something great or cheap (or both, or neither).
Originally posted by Matsu
It doesn't matter what the percentage is as a portion of gross revenue, what they spend is what they spend , and they spend more.
It used to be the case that Dell outspent Apple in R&D, but for the first time, Apple invested $471 million in its last financial year, while Dell spent $455 million in its last financial year. So, while only a relatively small amount, Apple did actually outspend Dell.
More important is the qualitative value that is gained from the R&D spend. Look at the last three years from Apple: 4 OS releases (Cheetah, Puma, Jaguar, Panther), App software (iLife, FCP updates, Safari etc), iChatAV, iSight, iPod (v1, v2, v2), iTMS, iBook, PowerBook (12, 15, 17), PowerMac G5, Xserve, Xserve RAID. There are some groundbreaking products in that list.
Dell may have taken prices down a notch or two, but we have not really seen anything earth shattering as far as new product releases are concerned. MS (from the OS perspective) released XP, a credible and major improvement over ME. However, Apple has released FOUR new OS's during the same timeframe. If we are lucky, we will see MS release Longhorn in 2006.
It seems to me, at least, that Apple is getting very good value and tangible, identifiable results from its R&D investment, and on the face of it, far more so that Dell and MS combined.
The reality is that Dell and Apple are in some sort of competition, else they wouldn't worry about what each other were doing. In the C|Net interview (and others) Michael Dell comes off as an envious imitator of Apple (and Steve Jobs); regardless of the truth of the situation.
For Mike Dell to make a R&D comparison to Apple is fallacious and he knows it. What he's doing is spinning his company's image toward the consumer sphere, as are other computer players like HP and Gateway...they all know that the current buzzword is "digital accessories" and these companies know that to be successful they must be perceived as "sexy" by the consumer. What Dell is doing is "corporate trash-talk"...only problem is, the industry pundits know where Dell Corp. really spend their R&D budget: efficiency.
Originally posted by Matsu
One gets the impression that Dell is slipping. Prices are not what they used to be, when you really get down and look at it.
That has a lot to do with Dell's (like WalMart's) business plan. They've taken a big healthy chunk of the market due to their pricing, so the next step is to raise prices to where they can actually make money off all those users since they have effectively eliminated much of their competition. the users have fewer choices and have inertia.
Anyway, Apple is said to have 2,500 people in R&D? How many in the whole company? I thought the total headcount was something around 10,000. What's also interesting about this is that much of Apple's former R&D people have moved into product pipelines, especially software. Do those people count as R&D?
Originally posted by pesi
take a quick look at dell.com. look at the totally enormous and befuddling number of different models they sell. then look at apple's streamlined product lines. divide r+d budgets accordingly. you'll see that apple spends far more on r+d for each individual product.
Gloriously bloated R&D tallies also bait your fair share of investors and analysts.
Dell = 1% (of revenue)
Apple = 7% (of revenue)
Another, related note of interest in Microsoft.
Microsoft = 15% (of revenue)
(About $7 BILLION)
(Microsoft is spending 14X as much as Apple and yet they STILL cannot seem to come up with anything terribly useful.)