In my opinion and judging Apple behavior, I think Apple its more worried consolidating reals state for infrastructure than putting $$$ on R&D cause that department simply do their job, Apple its not Sony or Panasonic that have hundreds and hundreds of products. Its streamlined aproach by all departments assure Apple very good feedback and outstanding products, the follow up of the products its even better.
What we have here its another analyst trying to fill his pocket speculating with Apple again.
Almost all products from Apple get excelent reviews, the VALUE of them its always on top and we still have more products to come in the year, probably a few surpises with new hardware.
Simple its better, that overwhelm the mind of many not only with a top notch OS, it does also cause most companys dont know how to work the way Apple does with that kind of succes.
Thank God our OS its only $129.00 and we have one and only one solution of it.(we have 2 flavors os OS X, regular and the server one, but people care more for regular than the other)
That shows the commitment Apple has with their consumers to provide them with the best "all in one solution". Not as windows that has a normal/pro/beginer/NT/etc. version and MS put an ultra high price in its software that lacks everything a consumer/pro want, no matter what kind of thing they do, if its personal or business.
Botton line: Apple always have been creative cause the people who works in its the root of all, not the money, its cause they think different!
That sounds very nice, but it is simply incorrect.
It's been shown that companies that invest the most in R&D have the best overall, long term success. These assessments are done on a regular basis. Lack of investment in R&D has been cited as one major reason why US companies have been losing leadership in many areas.
For many years, the Japanese were looked at as only spending the minimum on R&D, taking the best from elsewhere, and building products based on other's work. But those Japanese companies that decided to pour their own money into basic research have had the most success over the past ten years or so. The same is true of Korean companies. Meanwhile big American companies that were producing "me-too" products, have been swallowed up by foreign companies.
In a world of technology, patents are the mark of quality. While some here may laugh at MS, they have to be admired because they do take their profits and fold them back into the company. Their patent portfolio is not only admired, but also feared. Thew fact that management is willing to take vast losses in areas they feel is important to the long term sucess of the company hjas nothing to do with that. MS has files far more basic software parents that Apple has. If Apple, or someone else wants to produce software that needs certain functions, they might have to go to MS to license it. That doesn't lead to independence, it prevents it. Look at MS's FAT patents, and all of the trouble it has been causing. Ot the patents for JPEG and other basic technologies over the years.
With Apple losing out to MS and Creative regarding iPod software technologies, Apple could, someday, find themselves in court yet again.
We have spoken of Apple controlling their own technology, and fate. It becomes less likely that this will continue if others hold the reigns.
Apple, like other companies, must do basic research into areas of interest, even if that research never reaches the stage of becoming a product.
Applied research, which is what it is called when it is product directed, is the second stage of the research machine. If research is limited to this, using the results of other's basic research, then you are always going to be limited to what others find first.
You will never be able to make a true breakthrough in any area of importance, because the theoretical understanding is not there.
Over the decades, the best research laboratories, the Bell Labs system, Park, from Xerox, and IBM's Watson Research Center have been the center of American scientific and industrial prowess.
As those centers, and others saw their budgets cut back, or ended, American industrial might has lost ground as well. don't dismiss this as being unimportant, or unrelated to this discussion, because it is not. It is central.
1. The article implies that companies should peg a certain percentage of sales for R&D. In other words, all projects that could be funded within that amount, should. I disagree.
2. No company funds R&D in everything (except maybe Microsoft!!). A company decides what's important to its future - what differentiates it from others and focuses its attention on those things, including hiring people in those areas. Why should Apple continue funding basic CPU development, which it may have been doing under PowerPC? Apple may choose now to fund more OS stuff instead of CPU stuff and just stay in touch with what Intel is researching and planning for the future. Does Apple need to develop another drive design (remember the Woz floppy drive), ADB, or Firewire? That doesn't mean a company isn't aware of where basic technology is headed. Has Apple funded R&D in power supplies or battery development in the past? Doesn't seem like it - they've just kept abreast of what others are doing because it hasn't been a point of differentiation.
Apple has said what its core competencies are - computing, networking, software (OS and certain types of applications), user interface, and design. Computing is defined broadly so as to include iPods and devices like it, and networking includes not only LAN stuff like Bonjour, but WAN stuff that makes iTunes/.Mac, and Mobile Maybe there are more that haven't been made publicly known. In any case, SJ has said the consumer electronics business is moving into these areas of Apple's competence. Apple is clearly funding R&D in these areas, and not just going off willy-nilly to fund R&D in things that aren't related to its competencies.
The NSF has found that companies that have a below average percentage of spending on R&D in their industry do worse over the long term.
For decades, Hp spent between 8 and 9% a year on R&D. Their catalogs used to say that their was no product in their portfolio that was more than three years old. Hp grew into a computer giant based on that R&D. I have their catalogs going back to 1969. It's very impressive!
Unfortunately, they spun their instrumentation division off a few years ago. But, they still spend heavily on R&D, though as they are so large, the percentage has dropped. But, they are the leaders in several fields, and own much of their technology.
I have a 65" Hp DLP Tv monitor. The 1080p technology that all DLP sets use was developed by, and patented by Hp. Not Texas Instruments that developed and produces the DLP chips. Everyone else must go to Hp to license that tech. It would have been better if TI had developed it themselves, for the benefit of their own bottom line, but aggressive R&D from Hp beat them to it.
I'm curious if anyone knows or has an educated guess as to which costs more, R&D for software developement or R&d for hardware developement?
To make a new product out of nothing, software initially because of how labor intensive it is. However over the long run, software pays off much better because it's cheaper to reproduce.
Apple is in no danger of losing its innovation run if history is any indicator. Check out
this recent graph - increase in R&D spending has no correlation to sales growth.
It's the people and how the company is run from the ground up that makes the difference.
R&D is inversely proportional to how much the company sucks.
Yeah, Apple's spending more now than ever. Should it be more? yeah, sure, why not?
When you're talking about something like iPods--which ARE a fad, and just happened to be protected in their monopoly by iTMS and other stuff--eventually people are going to get sick of the defects caused by frenzied production and other products (in the works now) will appeal to certain sectors more than the iPod.
Eventually the iPod's marketshare will be picked apart piece-by-piece. At that time, Apple will have to do more than put a new hard drive in the iPod and call it another silly name--they'll have to fall back on new products.
Think of it: what's Apple done since 2001 that was all that creative? Oh wow they speed-bumped a few of their computers and released a over-priced psuedo-boombox into a flooded market to make a few bucks. Yep, they put some smaller hardware into a smaller box to make the mac mini, which is just crappy enough to not be a hit. Let's not forget the move to intel, which Apple was forced into, and is now causing Apple to nazi-stomp out the OSx86 project and making all the developers for OS X re-compile and pray.
They really haven't come up with anything too impressive.. everything they make is just taking existing stuff and putting it into a new box.
The only thing they HAVE done is made a really cool OS, and even research on that is slowing down (no new releases every year).
ALL the leading tech companies in the US are growing larger, if they end out-researching Apple, it could be very bad.
You don't just stop trying harder just because you're #1; that's just getting cocky. You will lose eventually.
So Dell should be crashing and burning soon, given its puny R&D over the years.
And why did IBM collapse? In absolute terms, they were outspending most on R&D for a long long time.
Spending on R&D is important; no disagreement on that. But the quality of research and the applicability (focus) of it to your vision and future products play an equally important role (unless you plan to just be a patent holding company and collect license fees).
A lot of studies that focus on just one variable and its correlation to company success turn out to be great at explaining the past, but poor at predicting the future. Other things that are important are vision, and the ability to foresee and act quickly when major disruptions occur.
So Dell should be crashing and burning soon, given its puny R&D over the years.
And why did IBM collapse? In absolute terms, they were outspending most on R&D for a long long time.
Spending on R&D is important; no disagreement on that. But the quality of research and the applicability (focus) of it to your vision and future products play an equally important role (unless you plan to just be a patent holding company and collect license fees).
A lot of studies that focus on just one variable and its correlation to company success turn out to be great at explaining the past, but poor at predicting the future. Other things that are important are vision, and the ability to foresee and act quickly when major disruptions occur.
Dells days of major growth are over. That's one of the reasons why it bought Alien. But, Dell still spends over $500 million a year on R&D.
So, if Apple is content to stay at the level they're at, that's fine. If they're lucky, they might even do that! But, Apple is different. Dell doesn't have to produce an OS. Apple does. Dell has Large servers and very cheap home machines. Apple has neither. Apple competes in a much smaller range of products, and has to do all of the software R&D themselves. Dell doesn't.
IBM didn't crash and burn. They are the worlds largest, and most successful computer company. They decided that low cost computing wasn't worth it to them. They do NOT deal in commodity product lines.
Your last paragraph is a cop-out. You have no idea as to the quality of Apple's R&D. And don't use financial ad copy to decide how a companies past performance measures up to todays.
Apple lucked out with the iPod. They came out with a very good product. But one that even Jobs has said did much better than they expected. They didn't even intend to have it work with PC's. It wasn't vision, it was; "Gee, it's doing so well on the Mac that PC people want it too, maybe we should do that.".
doing the music store was smart, but Apple wouldn't have thought of it had the iPod not done as well as it did. Apple took what became a good thing, and ran with it.
Not necessarily vision.
Remember that when Jobs took over, Apple still had almost 8% of the computer market. Only recently, it was at 2.8%. no vision there either.
The main piece of smarts Apple had was running OS X over Intel for all those years. They might have been smarter if they went to x86 much sooner.
They dont research at all, I worked there and the only thing they did was the DJ jukebox that is a failure, other than that ? NO, they do nothing mostly. They dont earn any money from basic systems, actually their money its coming from their services (complete care, installations, etc)
Ahh and of course the expensive parts, did u know their printers are lexmark and hewlet packard ? or did u know their LCD tv's and LCD monitors come Sansung, Viewsonic ?
They just stick their logo on those, could be DELL specifications but its only the way they have to keep cost low, and that compromise the quality.
Did u know a DELL Dimension takes only 18 minutes to build ?
And the patents stuff, Apple must fear MS ? lol nah !
Apple its not new in business and if it has something from their customers its loyalty, and not cause their consumers are a bunch of fanatics. Its cause their products work, have quality & are well designed. If MS its so nice why they dont make their own computers and rule everyone out ? Wheres all that R&D they made ?
I think that the article its mostly to speculate and play with the shares but at the end it has no effect after all, cause Apple does its job.
They dont research at all, I worked there and the only thing they did was the DJ jukebox that is a failure, other than that ? NO, they do nothing mostly. They dont earn any money from basic systems, actually their money its coming from their services (complete care, installations, etc)
Ahh and of course the expensive parts, did u know their printers are lexmark and hewlet packard ? or did u know their LCD tv's and LCD monitors come Sansung, Viewsonic ?
They just stick their logo on those, could be DELL specifications but its only the way they have to keep cost low, and that compromise the quality.
Did u know a DELL Dimension takes only 18 minutes to build ?
And the patents stuff, Apple must fear MS ? lol nah !
Apple its not new in business and if it has something from their customers its loyalty, and not cause their consumers are a bunch of fanatics. Its cause their products work, have quality & are well designed. If MS its so nice why they dont make their own computers and rule everyone out ? Wheres all that R&D they made ?
I think that the article its mostly to speculate and play with the shares but at the end it has no effect after all, cause Apple does its job.
They do spend on R&D no matter what you say.
If you worked there, you would know that they dropped Hp shortly after they bought Compac.
If you worked there, you would know that they dropped Hp shortly after they bought Compac.
DELLS total revenues are nearly $55 Billion.
$500 Million on R&D is what percentage again?
For a company that makes no software products, doesn't develop an operating system, only repackages stock hardware across the board, you have to wonder what exactly they spend that amount of money on. But then again 0.9% of the total gross sales means they really don't have jack shit to research and develop other than refining their mass manufacturing control systems, case designs and what not so that these standards products are "DELL" certified.
For a company that makes no software products, doesn't develop an operating system, only repackages stock hardware across the board, you have to wonder what exactly they spend that amount of money on. But then again 0.9% of the total gross sales means they really don't have jack shit to research and develop other than refining their mass manufacturing control systems, case designs and what not so that these standards products are "DELL" certified.
Now you begin to understand the difference between Apple and a PC company. They don't HAVE to spend the kind of money that a company like Apple does.
But, most of that $500 million they do spend goes into developing their server line, where they make a great deal of their profit. It also goes to develop their business services, where they also make a great deal of their profit.
Did I say IBM crashed and burned? And no, I wasn't referring to IBM's recent moves to get out of PCs and other commodity businesses to move into more high-value services. I'm going back more than a decade ago when IBM was doing R&D in just about everything and yet it didn't lead to growth. This was not because they didn't have a truckload of patents but because they didn't know how to adapt their products/services to the times. Gerstner's leadership actually led to a sharpened focus for products/services and R&D among other things. They stopped doing research in everything but thought through where they were going to differentiate.
You seemed to have missed my major point a few posts back about R&D being managed and focused on places where the company will make it's mark, rather than just increasing R&D at the same rate that revenues increase.
As for Dell, they have a laser-like focus for their R&D. What's their major point of differentiation? It's in their cost structure - from manufacturing to distribution. Guess where they spend their R&D.
Jjust because Apple's revenues have grown astronomically, it doesn't mean their R&D spending needs to grow at the same rate, as the original article implied and you seemed to concur.
For those with short-term memories, back in 2001, as Apple's revenues imploded, Jobs said that Apple would keep growing R&D - pretty much at the same rate it is growing today (with some 1-quarter spikes here and there) - which was opposite what other companies were doing (slashing costs). Apple took heat for that from Wall St. And back in 2000-2001, Apple had already embarked on its digital hub strategy and Internet strategy - find and read post-MacWorld news interviews. True, all the products were not defined, and some that were introduced were lousy/wrong, but the key concepts of computing and networking (local and Internet) moving into all of consumer electronics was envisioned. Go back and look at some of Fred Anderson's analyst briefs - the concepts, including major emphasis on Quicktime, were already there. There was a site back then that already began highlighting Apple's end-run around MS via multimedia - I can't remember its name or find any trace of it on the Internet. Neo over at macsimumnews is a much newer incarnation with less depth (Neo hasn't been able to say how Apple monetizes a bunch of stuff that he talks about). So yes, Apple has a long-term vision/strategy, it has nothing to do with dominating computer sales but simply to make great products that people want with a profit.
The lucking out with the iPod has caused revenues to grow much faster than Apple planned for, which has thrown the ratio out of whack. But Apple had a plan, including R&D growth, before the iPod blip, and it's making reasonable adjustments to it, but not growing it astronomically just because iPod sales did.
Quote:
Originally posted by melgross
Dells days of major growth are over. That's one of the reasons why it bought Alien. But, Dell still spends over $500 million a year on R&D.
...
IBM didn't crash and burn. They are the worlds largest, and most successful computer company. They decided that low cost computing wasn't worth it to them. They do NOT deal in commodity product lines.
Your last paragraph is a cop-out. You have no idea as to the quality of Apple's R&D. And don't use financial ad copy to decide how a companies past performance measures up to todays.
Apple lucked out with the iPod. They came out with a very good product. But one that even Jobs has said did much better than they expected. They didn't even intend to have it work with PC's. It wasn't vision, it was; "Gee, it's doing so well on the Mac that PC people want it too, maybe we should do that.".
doing the music store was smart, but Apple wouldn't have thought of it had the iPod not done as well as it did. Apple took what became a good thing, and ran with it.
Not necessarily vision.
Remember that when Jobs took over, Apple still had almost 8% of the computer market. Only recently, it was at 2.8%. no vision there either.
The main piece of smarts Apple had was running OS X over Intel for all those years. They might have been smarter if they went to x86 much sooner.
One more point: The Apple retail stores. Did you think Apple's sole intention in creating them was to sell only Macs? Did you think it was truly justifiable to invest millions, just to sell one niche product, Mac computers, to consumers? Don't you think there had to be an unspoken greater agenda?
And the mini stores, which have not yet expanded any further than the first few. Ron Johnson (ExecVP, Retail Stores) floating the idea that these would be in airports. Does it make sense to have such stores in lots of airports just to sell computers and iPods? Don't you think you'd have to be selling something more?
All of this is tied into Apple's vision and strategy to go after the consumer market, and Apple embarked on this course several years ago, even as Mac sales percentage-wise continued decreasing. And as Jobs said back at Mossberg's Digital bash in 2004 and 2005 (see Fortune magazine), the consumer electronics market is moving into Apple's sphere of expertise of computing and networking and flexible software-based user interfaces. So the incremental stuff Apple needs to learn and do R&D on is small in order to add these consumer electronics products to its portfolio compared to what consumer electronics companies have to do to make their products network-aware. In other words, how hard is it to add the technologies to make a consumer-level (not audiophile!) hi-fi speaker or an LCD HDTV vs. how hard is it to add networking and user-interface software to a Pioneer/Panasonic stereo or TV? Hey, even Gateway and Dell can make plain old TVs.
Did I say IBM crashed and burned? And no, I wasn't referring to IBM's recent moves to get out of PCs and other commodity businesses to move into more high-value services. I'm going back more than a decade ago when IBM was doing R&D in just about everything and yet it didn't lead to growth. This was not because they didn't have a truckload of patents but because they didn't know how to adapt their products/services to the times. Gerstner's leadership actually led to a sharpened focus for products/services and R&D among other things. They stopped doing research in everything but thought through where they were going to differentiate.
You seemed to have missed my major point a few posts back about R&D being managed and focused on places where the company will make it's mark, rather than just increasing R&D at the same rate that revenues increase.
As for Dell, they have a laser-like focus for their R&D. What's their major point of differentiation? It's in their cost structure - from manufacturing to distribution. Guess where they spend their R&D.
Jjust because Apple's revenues have grown astronomically, it doesn't mean their R&D spending needs to grow at the same rate, as the original article implied and you seemed to concur.
For those with short-term memories, back in 2001, as Apple's revenues imploded, Jobs said that Apple would keep growing R&D - pretty much at the same rate it is growing today (with some 1-quarter spikes here and there) - which was opposite what other companies were doing (slashing costs). Apple took heat for that from Wall St. And back in 2000-2001, Apple had already embarked on its digital hub strategy and Internet strategy - find and read post-MacWorld news interviews. True, all the products were not defined, and some that were introduced were lousy/wrong, but the key concepts of computing and networking (local and Internet) moving into all of consumer electronics was envisioned. Go back and look at some of Fred Anderson's analyst briefs - the concepts, including major emphasis on Quicktime, were already there. There was a site back then that already began highlighting Apple's end-run around MS via multimedia - I can't remember its name or find any trace of it on the Internet. Neo over at macsimumnews is a much newer incarnation with less depth (Neo hasn't been able to say how Apple monetizes a bunch of stuff that he talks about). So yes, Apple has a long-term vision/strategy, it has nothing to do with dominating computer sales but simply to make great products that people want with a profit.
The lucking out with the iPod has caused revenues to grow much faster than Apple planned for, which has thrown the ratio out of whack. But Apple had a plan, including R&D growth, before the iPod blip, and it's making reasonable adjustments to it, but not growing it astronomically just because iPod sales did.
No, that is true, you said they collapsed. Same thing. It's pretty obvious they didn't.
IBM's problem with the PC was BECAUSE they failed to patent the bus, and they failed to protect their IP in PCDOS. If they did those two things, they might still be the major PC manufacturer. It isn't because they did R&D that wasn't focused.
And speaking of focus, they changed theirs, and are doing just fine.
And, no, I didn't miss your point. I'm not saying that R&D must follow revenues in a direct ratio. But, as a company gets larger, and has more product lines, and products, it must increase R&D. In a technology industry, R&D is the only way of developing new products areas.
Obviously, a company manufacturing computing devices shouldn't conduct research on ice cream. But R&D on advanced software development, hardware developement, and content delivery systems is fair game. Much of that may go nowhere, but there is a learning process involved there as well. You never know where R&D will lead. That's why IBM does basic research in solid state physics. I'm not suggesting that Apple do that work as well.
Apple's unexpected success with the iPod has caused them to do research in areas they didn't expect. But, the rest of the world is trying to catch up. If Apple doesn't want to buy technologies, they have to develop them themselves. When successful companies feel pressure, they invest more. Larger companies have more to invest.
One more point: The Apple retail stores. Did you think Apple's sole intention in creating them was to sell only Macs? Did you think it was truly justifiable to invest millions, just to sell one niche product, Mac computers, to consumers? Don't you think there had to be an unspoken greater agenda?
And the mini stores, which have not yet expanded any further than the first few. Ron Johnson (ExecVP, Retail Stores) floating the idea that these would be in airports. Does it make sense to have such stores in lots of airports just to sell computers and iPods? Don't you think you'd have to be selling something more?
All of this is tied into Apple's vision and strategy to go after the consumer market, and Apple embarked on this course several years ago, even as Mac sales percentage-wise continued decreasing. And as Jobs said back at Mossberg's Digital bash in 2004 and 2005 (see Fortune magazine), the consumer electronics market is moving into Apple's sphere of expertise of computing and networking and flexible software-based user interfaces. So the incremental stuff Apple needs to learn and do R&D on is small in order to add these consumer electronics products to its portfolio compared to what consumer electronics companies have to do to make their products network-aware. In other words, how hard is it to add the technologies to make a consumer-level (not audiophile!) hi-fi speaker or an LCD HDTV vs. how hard is it to add networking and user-interface software to a Pioneer/Panasonic stereo or TV? Hey, even Gateway and Dell can make plain old TVs.
If you are still talking to me, you are making points that aren't required.
Apple opened the brick and mortar stores for the same reason they opened the web store. Not enough dealers. As the web store and the brick and mortar stores now have sales at the 50% level of Apple's total sales, Apple feels that it can use them to increase their margins as well.
What will they use them for other than to sell the products they are selling now? I don't know. you don't either. But I have also guessed that Apple has other products in mind.
The product areas you have mentioned can either be entered with me-too products, or products that have a unique feature or function. As I mentioned, Hp developed 1080p on DLP. There is no reason why Apple couldn't develop a technology for a product line that also advances the technology.
Many of the networking companies have developed methods of increasing the bandwidth of their WiFi routers. Again, there is no reason why Apple couldn't have done the same.
And Gateway proved that they COULDN't make Tv's.
Apple has shown a propensity to develop a new product, and then watch the rest of the world pass it by. They become too satisfied with their own products, sometimes, when they should continue to lead.
Think of it: what's Apple done since 2001 that was all that creative? Oh wow they speed-bumped a few of their computers and released a over-priced psuedo-boombox into a flooded market to make a few bucks. Yep, they put some smaller hardware into a smaller box to make the mac mini, which is just crappy enough to not be a hit. Let's not forget the move to intel, which Apple was forced into, and is now causing Apple to nazi-stomp out the OSx86 project and making all the developers for OS X re-compile and pray.
They really haven't come up with anything too impressive.. everything they make is just taking existing stuff and putting it into a new box.
The only thing they HAVE done is made a really cool OS, and even research on that is slowing down (no new releases every year).
ALL the leading tech companies in the US are growing larger, if they end out-researching Apple, it could be very bad.
You don't just stop trying harder just because you're #1; that's just getting cocky. You will lose eventually.
More and more, it's not the features that drive product sales, but it's ability to be easily used. Long time ago, things just had single-purpose knobs and buttons and basically operated in a single mode. With software and displays, we've moved into products with a great deal more flexibility and configurability - a great many more choices for a user to make. Where Apple is innovating is in the user interface. Making it simpler is innovation.
So yes Apple takes existing stuff and puts it into a new box, but Apple also puts a user interface on it that just makes sense and it just works. It connects to other stuff in a way that's transparent. It might not seem like much but Apple is clearly the leader in this area, and we see from the stream of patents (touch, voice) that this is one area of Apple's focus.
Apple need not do R&D in everything but in those areas, of which user interfaces is one, in which it differentiates itself from others. It doesn't need to develop turbo wi-fi instead of just using the standard (because people really want to stick with the standards).
True, by not doing basic research where you there is a low probability of payback but if you hit on something the payback is tremendous, they do risk being surpassed. But given the high cost and Apple's vision, it seems to be a risk worth taking.
apple's 'innovation' is a mile wide & an inch deep.
this is the sentiment from those who both care & admire apple.
it is not crazy talk.
dlf
The thing is, innovation just doesn't happen in big organisations. The current thinking is that once you get passed about 5-8 people on a project, things become bureaucratic, and innovation stops. Apple's response is classic - don't grow just for the sake of it. They keep their R&D teams small and agile. They always have when Steve has been around.
Something to think about. How many people do you reckon they had on the iPod development team? How much money have those guys earned for Apple. How many of us predicted that an mp3 player would turn out to be Apple's biggest cash cow EVER.
There is only one Jonathan Ives. There is only one Avie Tevenian. Apple already pays both millions. R&D expenditure does NOT need to keep pace with the company's bottom line. One might suggest that in fact the reverse is true.
Comments
Originally posted by plokoonpma
In my opinion and judging Apple behavior, I think Apple its more worried consolidating reals state for infrastructure than putting $$$ on R&D cause that department simply do their job, Apple its not Sony or Panasonic that have hundreds and hundreds of products. Its streamlined aproach by all departments assure Apple very good feedback and outstanding products, the follow up of the products its even better.
What we have here its another analyst trying to fill his pocket speculating with Apple again.
Almost all products from Apple get excelent reviews, the VALUE of them its always on top and we still have more products to come in the year, probably a few surpises with new hardware.
Simple its better, that overwhelm the mind of many not only with a top notch OS, it does also cause most companys dont know how to work the way Apple does with that kind of succes.
Thank God our OS its only $129.00 and we have one and only one solution of it.(we have 2 flavors os OS X, regular and the server one, but people care more for regular than the other)
That shows the commitment Apple has with their consumers to provide them with the best "all in one solution". Not as windows that has a normal/pro/beginer/NT/etc. version and MS put an ultra high price in its software that lacks everything a consumer/pro want, no matter what kind of thing they do, if its personal or business.
Botton line: Apple always have been creative cause the people who works in its the root of all, not the money, its cause they think different!
That sounds very nice, but it is simply incorrect.
It's been shown that companies that invest the most in R&D have the best overall, long term success. These assessments are done on a regular basis. Lack of investment in R&D has been cited as one major reason why US companies have been losing leadership in many areas.
For many years, the Japanese were looked at as only spending the minimum on R&D, taking the best from elsewhere, and building products based on other's work. But those Japanese companies that decided to pour their own money into basic research have had the most success over the past ten years or so. The same is true of Korean companies. Meanwhile big American companies that were producing "me-too" products, have been swallowed up by foreign companies.
In a world of technology, patents are the mark of quality. While some here may laugh at MS, they have to be admired because they do take their profits and fold them back into the company. Their patent portfolio is not only admired, but also feared. Thew fact that management is willing to take vast losses in areas they feel is important to the long term sucess of the company hjas nothing to do with that. MS has files far more basic software parents that Apple has. If Apple, or someone else wants to produce software that needs certain functions, they might have to go to MS to license it. That doesn't lead to independence, it prevents it. Look at MS's FAT patents, and all of the trouble it has been causing. Ot the patents for JPEG and other basic technologies over the years.
With Apple losing out to MS and Creative regarding iPod software technologies, Apple could, someday, find themselves in court yet again.
We have spoken of Apple controlling their own technology, and fate. It becomes less likely that this will continue if others hold the reigns.
Apple, like other companies, must do basic research into areas of interest, even if that research never reaches the stage of becoming a product.
Applied research, which is what it is called when it is product directed, is the second stage of the research machine. If research is limited to this, using the results of other's basic research, then you are always going to be limited to what others find first.
You will never be able to make a true breakthrough in any area of importance, because the theoretical understanding is not there.
Over the decades, the best research laboratories, the Bell Labs system, Park, from Xerox, and IBM's Watson Research Center have been the center of American scientific and industrial prowess.
As those centers, and others saw their budgets cut back, or ended, American industrial might has lost ground as well. don't dismiss this as being unimportant, or unrelated to this discussion, because it is not. It is central.
Originally posted by mark2005
1. The article implies that companies should peg a certain percentage of sales for R&D. In other words, all projects that could be funded within that amount, should. I disagree.
2. No company funds R&D in everything (except maybe Microsoft!!). A company decides what's important to its future - what differentiates it from others and focuses its attention on those things, including hiring people in those areas. Why should Apple continue funding basic CPU development, which it may have been doing under PowerPC? Apple may choose now to fund more OS stuff instead of CPU stuff and just stay in touch with what Intel is researching and planning for the future. Does Apple need to develop another drive design (remember the Woz floppy drive), ADB, or Firewire? That doesn't mean a company isn't aware of where basic technology is headed. Has Apple funded R&D in power supplies or battery development in the past? Doesn't seem like it - they've just kept abreast of what others are doing because it hasn't been a point of differentiation.
Apple has said what its core competencies are - computing, networking, software (OS and certain types of applications), user interface, and design. Computing is defined broadly so as to include iPods and devices like it, and networking includes not only LAN stuff like Bonjour, but WAN stuff that makes iTunes/.Mac, and Mobile Maybe there are more that haven't been made publicly known. In any case, SJ has said the consumer electronics business is moving into these areas of Apple's competence. Apple is clearly funding R&D in these areas, and not just going off willy-nilly to fund R&D in things that aren't related to its competencies.
The NSF has found that companies that have a below average percentage of spending on R&D in their industry do worse over the long term.
For decades, Hp spent between 8 and 9% a year on R&D. Their catalogs used to say that their was no product in their portfolio that was more than three years old. Hp grew into a computer giant based on that R&D. I have their catalogs going back to 1969. It's very impressive!
Unfortunately, they spun their instrumentation division off a few years ago. But, they still spend heavily on R&D, though as they are so large, the percentage has dropped. But, they are the leaders in several fields, and own much of their technology.
I have a 65" Hp DLP Tv monitor. The 1080p technology that all DLP sets use was developed by, and patented by Hp. Not Texas Instruments that developed and produces the DLP chips. Everyone else must go to Hp to license that tech. It would have been better if TI had developed it themselves, for the benefit of their own bottom line, but aggressive R&D from Hp beat them to it.
Apple needs to be the same way.
Originally posted by backtomac
I'm curious if anyone knows or has an educated guess as to which costs more, R&D for software developement or R&d for hardware developement?
To make a new product out of nothing, software initially because of how labor intensive it is. However over the long run, software pays off much better because it's cheaper to reproduce.
Originally posted by Tux Kapono
Apple is in no danger of losing its innovation run if history is any indicator. Check out
this recent graph - increase in R&D spending has no correlation to sales growth.
It's the people and how the company is run from the ground up that makes the difference.
R&D is inversely proportional to how much the company sucks.
Yeah, Apple's spending more now than ever. Should it be more? yeah, sure, why not?
When you're talking about something like iPods--which ARE a fad, and just happened to be protected in their monopoly by iTMS and other stuff--eventually people are going to get sick of the defects caused by frenzied production and other products (in the works now) will appeal to certain sectors more than the iPod.
Eventually the iPod's marketshare will be picked apart piece-by-piece. At that time, Apple will have to do more than put a new hard drive in the iPod and call it another silly name--they'll have to fall back on new products.
Think of it: what's Apple done since 2001 that was all that creative? Oh wow they speed-bumped a few of their computers and released a over-priced psuedo-boombox into a flooded market to make a few bucks. Yep, they put some smaller hardware into a smaller box to make the mac mini, which is just crappy enough to not be a hit. Let's not forget the move to intel, which Apple was forced into, and is now causing Apple to nazi-stomp out the OSx86 project and making all the developers for OS X re-compile and pray.
They really haven't come up with anything too impressive.. everything they make is just taking existing stuff and putting it into a new box.
The only thing they HAVE done is made a really cool OS, and even research on that is slowing down (no new releases every year).
ALL the leading tech companies in the US are growing larger, if they end out-researching Apple, it could be very bad.
You don't just stop trying harder just because you're #1; that's just getting cocky. You will lose eventually.
And why did IBM collapse? In absolute terms, they were outspending most on R&D for a long long time.
Spending on R&D is important; no disagreement on that. But the quality of research and the applicability (focus) of it to your vision and future products play an equally important role (unless you plan to just be a patent holding company and collect license fees).
A lot of studies that focus on just one variable and its correlation to company success turn out to be great at explaining the past, but poor at predicting the future. Other things that are important are vision, and the ability to foresee and act quickly when major disruptions occur.
Originally posted by mark2005
So Dell should be crashing and burning soon, given its puny R&D over the years.
And why did IBM collapse? In absolute terms, they were outspending most on R&D for a long long time.
Spending on R&D is important; no disagreement on that. But the quality of research and the applicability (focus) of it to your vision and future products play an equally important role (unless you plan to just be a patent holding company and collect license fees).
A lot of studies that focus on just one variable and its correlation to company success turn out to be great at explaining the past, but poor at predicting the future. Other things that are important are vision, and the ability to foresee and act quickly when major disruptions occur.
Dells days of major growth are over. That's one of the reasons why it bought Alien. But, Dell still spends over $500 million a year on R&D.
So, if Apple is content to stay at the level they're at, that's fine. If they're lucky, they might even do that! But, Apple is different. Dell doesn't have to produce an OS. Apple does. Dell has Large servers and very cheap home machines. Apple has neither. Apple competes in a much smaller range of products, and has to do all of the software R&D themselves. Dell doesn't.
IBM didn't crash and burn. They are the worlds largest, and most successful computer company. They decided that low cost computing wasn't worth it to them. They do NOT deal in commodity product lines.
Your last paragraph is a cop-out. You have no idea as to the quality of Apple's R&D. And don't use financial ad copy to decide how a companies past performance measures up to todays.
Apple lucked out with the iPod. They came out with a very good product. But one that even Jobs has said did much better than they expected. They didn't even intend to have it work with PC's. It wasn't vision, it was; "Gee, it's doing so well on the Mac that PC people want it too, maybe we should do that.".
doing the music store was smart, but Apple wouldn't have thought of it had the iPod not done as well as it did. Apple took what became a good thing, and ran with it.
Not necessarily vision.
Remember that when Jobs took over, Apple still had almost 8% of the computer market. Only recently, it was at 2.8%. no vision there either.
The main piece of smarts Apple had was running OS X over Intel for all those years. They might have been smarter if they went to x86 much sooner.
Come on!!!!
They dont research at all, I worked there and the only thing they did was the DJ jukebox that is a failure, other than that ? NO, they do nothing mostly. They dont earn any money from basic systems, actually their money its coming from their services (complete care, installations, etc)
Ahh and of course the expensive parts, did u know their printers are lexmark and hewlet packard ? or did u know their LCD tv's and LCD monitors come Sansung, Viewsonic ?
They just stick their logo on those, could be DELL specifications but its only the way they have to keep cost low, and that compromise the quality.
Did u know a DELL Dimension takes only 18 minutes to build ?
And the patents stuff, Apple must fear MS ? lol nah !
Apple its not new in business and if it has something from their customers its loyalty, and not cause their consumers are a bunch of fanatics. Its cause their products work, have quality & are well designed. If MS its so nice why they dont make their own computers and rule everyone out ? Wheres all that R&D they made ?
I think that the article its mostly to speculate and play with the shares but at the end it has no effect after all, cause Apple does its job.
Originally posted by plokoonpma
DELL ?
Come on!!!!
They dont research at all, I worked there and the only thing they did was the DJ jukebox that is a failure, other than that ? NO, they do nothing mostly. They dont earn any money from basic systems, actually their money its coming from their services (complete care, installations, etc)
Ahh and of course the expensive parts, did u know their printers are lexmark and hewlet packard ? or did u know their LCD tv's and LCD monitors come Sansung, Viewsonic ?
They just stick their logo on those, could be DELL specifications but its only the way they have to keep cost low, and that compromise the quality.
Did u know a DELL Dimension takes only 18 minutes to build ?
And the patents stuff, Apple must fear MS ? lol nah !
Apple its not new in business and if it has something from their customers its loyalty, and not cause their consumers are a bunch of fanatics. Its cause their products work, have quality & are well designed. If MS its so nice why they dont make their own computers and rule everyone out ? Wheres all that R&D they made ?
I think that the article its mostly to speculate and play with the shares but at the end it has no effect after all, cause Apple does its job.
They do spend on R&D no matter what you say.
If you worked there, you would know that they dropped Hp shortly after they bought Compac.
Originally posted by melgross
They do spend on R&D no matter what you say.
If you worked there, you would know that they dropped Hp shortly after they bought Compac.
DELLS total revenues are nearly $55 Billion.
$500 Million on R&D is what percentage again?
For a company that makes no software products, doesn't develop an operating system, only repackages stock hardware across the board, you have to wonder what exactly they spend that amount of money on. But then again 0.9% of the total gross sales means they really don't have jack shit to research and develop other than refining their mass manufacturing control systems, case designs and what not so that these standards products are "DELL" certified.
Originally posted by mdriftmeyer
DELLS total revenues are nearly $55 Billion.
$500 Million on R&D is what percentage again?
For a company that makes no software products, doesn't develop an operating system, only repackages stock hardware across the board, you have to wonder what exactly they spend that amount of money on. But then again 0.9% of the total gross sales means they really don't have jack shit to research and develop other than refining their mass manufacturing control systems, case designs and what not so that these standards products are "DELL" certified.
Now you begin to understand the difference between Apple and a PC company. They don't HAVE to spend the kind of money that a company like Apple does.
But, most of that $500 million they do spend goes into developing their server line, where they make a great deal of their profit. It also goes to develop their business services, where they also make a great deal of their profit.
Originally posted by davidf01
it is called eating the seed corn.
dlf
This is starting to resonate with me.
Originally posted by davidf01
it is called eating the seed corn.
dlf
This is starting to resonate with me.
You seemed to have missed my major point a few posts back about R&D being managed and focused on places where the company will make it's mark, rather than just increasing R&D at the same rate that revenues increase.
As for Dell, they have a laser-like focus for their R&D. What's their major point of differentiation? It's in their cost structure - from manufacturing to distribution. Guess where they spend their R&D.
Jjust because Apple's revenues have grown astronomically, it doesn't mean their R&D spending needs to grow at the same rate, as the original article implied and you seemed to concur.
For those with short-term memories, back in 2001, as Apple's revenues imploded, Jobs said that Apple would keep growing R&D - pretty much at the same rate it is growing today (with some 1-quarter spikes here and there) - which was opposite what other companies were doing (slashing costs). Apple took heat for that from Wall St. And back in 2000-2001, Apple had already embarked on its digital hub strategy and Internet strategy - find and read post-MacWorld news interviews. True, all the products were not defined, and some that were introduced were lousy/wrong, but the key concepts of computing and networking (local and Internet) moving into all of consumer electronics was envisioned. Go back and look at some of Fred Anderson's analyst briefs - the concepts, including major emphasis on Quicktime, were already there. There was a site back then that already began highlighting Apple's end-run around MS via multimedia - I can't remember its name or find any trace of it on the Internet. Neo over at macsimumnews is a much newer incarnation with less depth (Neo hasn't been able to say how Apple monetizes a bunch of stuff that he talks about). So yes, Apple has a long-term vision/strategy, it has nothing to do with dominating computer sales but simply to make great products that people want with a profit.
The lucking out with the iPod has caused revenues to grow much faster than Apple planned for, which has thrown the ratio out of whack. But Apple had a plan, including R&D growth, before the iPod blip, and it's making reasonable adjustments to it, but not growing it astronomically just because iPod sales did.
Originally posted by melgross
Dells days of major growth are over. That's one of the reasons why it bought Alien. But, Dell still spends over $500 million a year on R&D.
...
IBM didn't crash and burn. They are the worlds largest, and most successful computer company. They decided that low cost computing wasn't worth it to them. They do NOT deal in commodity product lines.
Your last paragraph is a cop-out. You have no idea as to the quality of Apple's R&D. And don't use financial ad copy to decide how a companies past performance measures up to todays.
Apple lucked out with the iPod. They came out with a very good product. But one that even Jobs has said did much better than they expected. They didn't even intend to have it work with PC's. It wasn't vision, it was; "Gee, it's doing so well on the Mac that PC people want it too, maybe we should do that.".
doing the music store was smart, but Apple wouldn't have thought of it had the iPod not done as well as it did. Apple took what became a good thing, and ran with it.
Not necessarily vision.
Remember that when Jobs took over, Apple still had almost 8% of the computer market. Only recently, it was at 2.8%. no vision there either.
The main piece of smarts Apple had was running OS X over Intel for all those years. They might have been smarter if they went to x86 much sooner.
And the mini stores, which have not yet expanded any further than the first few. Ron Johnson (ExecVP, Retail Stores) floating the idea that these would be in airports. Does it make sense to have such stores in lots of airports just to sell computers and iPods? Don't you think you'd have to be selling something more?
All of this is tied into Apple's vision and strategy to go after the consumer market, and Apple embarked on this course several years ago, even as Mac sales percentage-wise continued decreasing. And as Jobs said back at Mossberg's D
Originally posted by mark2005
Did I say IBM crashed and burned? And no, I wasn't referring to IBM's recent moves to get out of PCs and other commodity businesses to move into more high-value services. I'm going back more than a decade ago when IBM was doing R&D in just about everything and yet it didn't lead to growth. This was not because they didn't have a truckload of patents but because they didn't know how to adapt their products/services to the times. Gerstner's leadership actually led to a sharpened focus for products/services and R&D among other things. They stopped doing research in everything but thought through where they were going to differentiate.
You seemed to have missed my major point a few posts back about R&D being managed and focused on places where the company will make it's mark, rather than just increasing R&D at the same rate that revenues increase.
As for Dell, they have a laser-like focus for their R&D. What's their major point of differentiation? It's in their cost structure - from manufacturing to distribution. Guess where they spend their R&D.
Jjust because Apple's revenues have grown astronomically, it doesn't mean their R&D spending needs to grow at the same rate, as the original article implied and you seemed to concur.
For those with short-term memories, back in 2001, as Apple's revenues imploded, Jobs said that Apple would keep growing R&D - pretty much at the same rate it is growing today (with some 1-quarter spikes here and there) - which was opposite what other companies were doing (slashing costs). Apple took heat for that from Wall St. And back in 2000-2001, Apple had already embarked on its digital hub strategy and Internet strategy - find and read post-MacWorld news interviews. True, all the products were not defined, and some that were introduced were lousy/wrong, but the key concepts of computing and networking (local and Internet) moving into all of consumer electronics was envisioned. Go back and look at some of Fred Anderson's analyst briefs - the concepts, including major emphasis on Quicktime, were already there. There was a site back then that already began highlighting Apple's end-run around MS via multimedia - I can't remember its name or find any trace of it on the Internet. Neo over at macsimumnews is a much newer incarnation with less depth (Neo hasn't been able to say how Apple monetizes a bunch of stuff that he talks about). So yes, Apple has a long-term vision/strategy, it has nothing to do with dominating computer sales but simply to make great products that people want with a profit.
The lucking out with the iPod has caused revenues to grow much faster than Apple planned for, which has thrown the ratio out of whack. But Apple had a plan, including R&D growth, before the iPod blip, and it's making reasonable adjustments to it, but not growing it astronomically just because iPod sales did.
No, that is true, you said they collapsed. Same thing. It's pretty obvious they didn't.
IBM's problem with the PC was BECAUSE they failed to patent the bus, and they failed to protect their IP in PCDOS. If they did those two things, they might still be the major PC manufacturer. It isn't because they did R&D that wasn't focused.
And speaking of focus, they changed theirs, and are doing just fine.
And, no, I didn't miss your point. I'm not saying that R&D must follow revenues in a direct ratio. But, as a company gets larger, and has more product lines, and products, it must increase R&D. In a technology industry, R&D is the only way of developing new products areas.
Obviously, a company manufacturing computing devices shouldn't conduct research on ice cream. But R&D on advanced software development, hardware developement, and content delivery systems is fair game. Much of that may go nowhere, but there is a learning process involved there as well. You never know where R&D will lead. That's why IBM does basic research in solid state physics. I'm not suggesting that Apple do that work as well.
Apple's unexpected success with the iPod has caused them to do research in areas they didn't expect. But, the rest of the world is trying to catch up. If Apple doesn't want to buy technologies, they have to develop them themselves. When successful companies feel pressure, they invest more. Larger companies have more to invest.
Originally posted by mark2005
One more point: The Apple retail stores. Did you think Apple's sole intention in creating them was to sell only Macs? Did you think it was truly justifiable to invest millions, just to sell one niche product, Mac computers, to consumers? Don't you think there had to be an unspoken greater agenda?
And the mini stores, which have not yet expanded any further than the first few. Ron Johnson (ExecVP, Retail Stores) floating the idea that these would be in airports. Does it make sense to have such stores in lots of airports just to sell computers and iPods? Don't you think you'd have to be selling something more?
All of this is tied into Apple's vision and strategy to go after the consumer market, and Apple embarked on this course several years ago, even as Mac sales percentage-wise continued decreasing. And as Jobs said back at Mossberg's D
If you are still talking to me, you are making points that aren't required.
Apple opened the brick and mortar stores for the same reason they opened the web store. Not enough dealers. As the web store and the brick and mortar stores now have sales at the 50% level of Apple's total sales, Apple feels that it can use them to increase their margins as well.
What will they use them for other than to sell the products they are selling now? I don't know. you don't either. But I have also guessed that Apple has other products in mind.
The product areas you have mentioned can either be entered with me-too products, or products that have a unique feature or function. As I mentioned, Hp developed 1080p on DLP. There is no reason why Apple couldn't develop a technology for a product line that also advances the technology.
Many of the networking companies have developed methods of increasing the bandwidth of their WiFi routers. Again, there is no reason why Apple couldn't have done the same.
And Gateway proved that they COULDN't make Tv's.
Apple has shown a propensity to develop a new product, and then watch the rest of the world pass it by. They become too satisfied with their own products, sometimes, when they should continue to lead.
Originally posted by plokoonpma
DELL still use Hewlet Packard, not for the North Amercian market but for the rest, mostly Latin America.
Really, which models? Not in Europe
Originally posted by slughead
Think of it: what's Apple done since 2001 that was all that creative? Oh wow they speed-bumped a few of their computers and released a over-priced psuedo-boombox into a flooded market to make a few bucks. Yep, they put some smaller hardware into a smaller box to make the mac mini, which is just crappy enough to not be a hit. Let's not forget the move to intel, which Apple was forced into, and is now causing Apple to nazi-stomp out the OSx86 project and making all the developers for OS X re-compile and pray.
They really haven't come up with anything too impressive.. everything they make is just taking existing stuff and putting it into a new box.
The only thing they HAVE done is made a really cool OS, and even research on that is slowing down (no new releases every year).
ALL the leading tech companies in the US are growing larger, if they end out-researching Apple, it could be very bad.
You don't just stop trying harder just because you're #1; that's just getting cocky. You will lose eventually.
More and more, it's not the features that drive product sales, but it's ability to be easily used. Long time ago, things just had single-purpose knobs and buttons and basically operated in a single mode. With software and displays, we've moved into products with a great deal more flexibility and configurability - a great many more choices for a user to make. Where Apple is innovating is in the user interface. Making it simpler is innovation.
So yes Apple takes existing stuff and puts it into a new box, but Apple also puts a user interface on it that just makes sense and it just works. It connects to other stuff in a way that's transparent. It might not seem like much but Apple is clearly the leader in this area, and we see from the stream of patents (touch, voice) that this is one area of Apple's focus.
Apple need not do R&D in everything but in those areas, of which user interfaces is one, in which it differentiates itself from others. It doesn't need to develop turbo wi-fi instead of just using the standard (because people really want to stick with the standards).
True, by not doing basic research where you there is a low probability of payback but if you hit on something the payback is tremendous, they do risk being surpassed. But given the high cost and Apple's vision, it seems to be a risk worth taking.
Originally posted by davidf01
the article is dead right.
it is called eating the seed corn.
apple's 'innovation' is a mile wide & an inch deep.
this is the sentiment from those who both care & admire apple.
it is not crazy talk.
dlf
The thing is, innovation just doesn't happen in big organisations. The current thinking is that once you get passed about 5-8 people on a project, things become bureaucratic, and innovation stops. Apple's response is classic - don't grow just for the sake of it. They keep their R&D teams small and agile. They always have when Steve has been around.
Something to think about. How many people do you reckon they had on the iPod development team? How much money have those guys earned for Apple. How many of us predicted that an mp3 player would turn out to be Apple's biggest cash cow EVER.
There is only one Jonathan Ives. There is only one Avie Tevenian. Apple already pays both millions. R&D expenditure does NOT need to keep pace with the company's bottom line. One might suggest that in fact the reverse is true.