Apple spends less on R&D than other tech giants, but still gets more out of it

Research and development is a huge part of many companies across the globe, but one thing has remained pretty constant at Apple over the years: Not spending a lot, but getting big returns.
According to a new report published recently by Bloomberg, Apple is seeing far greater success and return in its R&D endeavors than many of its most prestigious rivals,
despite spending a smaller percentage of its total revenue on the area. This is in light of the company actually doubling its R&D spending over the last couple of years, up to $8.1 billion in fiscal year 2015, just 3.5% of its $233 billion in revenue. However, compare that to Facebook’s 21 percent ($2.6 billion), Alphabet’s 15 percent ($9.2 billion), and Qualcomm’s 22% ($5.6 billion).

This is a track record that Apple has been following for many years. Dating back to 1998 when Steve Jobs said that “innovation has nothing to do with how many R&D dollars you have.” Apple is indeed spending more than it ever has in research and development, but when compared to the company’s rivals, it’s still spending less of its total revenue, while companies are focusing quite a bit more in the area.
But while Apple may be a quieter presence within R&D, it’s still seeing more success and attention, according to Ram Mudambi, a business school professor at Temple University, based in Philadelphia, Pennsylvania. Apple’s size and ability to shape the future of technology leads many of its suppliers, who are also the suppliers of other companies, to share with Apple breakthrough technology first — all in the hopes that they’ll get Apple’s business moving forward.

“The prospect of getting a new chip, screen, or camera flash inside a future iPhone helps Apple steer other companies’ research. Apple sold more than 230 million iPhones last year and has committed to spending $29.5 billion in the next 12 months on components such as chips, screens, camera modules, and graphics processors, up from $24.5 billion last year. ‘Suppliers are racing with each other to get Apple’s business, and part of the racing they are doing is spending more on R&D,’ Mudambi says”

For now, the majority of Apple’s own research and development endeavors are reportedly focused on its A-series of systems-on-a-chip, like the A9X that’s currently installed within the iPad Pro. Apple continues to make advances in its processors to make them faster and more powerful, a trend that will continue into the future as Apple continues to develop the processors and infuse new technology into them.
[via Bloomberg]

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