
A look at Apple's R&D expenditures from 1995-2013 - anderzole
http://www.tuaw.com/2014/02/12/a-look-at-apples-randd-expenditures-from-1995-2013/
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cromwellian
Not surprising, since most of the core R&D needed happens in the supply chain
-- the fabs, the screen manufacturers, the battery makers, sensors, etc. If
the iWatch for example, uses new curved battery tech or curved screen, that
will have arisen mostly from the R&D done by their partners.

With the acquisition of PA Semi, Apple does seem to be doing basic chip R&D
now. But the industry as a whole would be no where without most of the
traditional semiconductor manufacturers doing R&D to keep Moore's law going.

I do think it is sad that Apple, with $100+ billion in cash sitting in the
bank, isn't spending more on basic research. IBM, HP, Bell Labs, Xerox, et al
delivered a lot of serendipitous discoveries by spending money on stuff with
no immediate product focus or return. Apple is sucking up the lion share of
the mobile revolution's profits, but I think a bigger fraction of that could
be channeled back into basic R&D as a whole.

~~~
joezydeco
..and Microsoft, Atari, Sun, et al sunk billions of dollars into "research"
groups with very little to show for it other than a bunch of concept videos
and the resumes of the researchers. It's a double-edged sword.

~~~
cromwellian
That's the nature of R&D. There are 100 failures for every 1 success, because
often, the usefulness of basic research is unknown.

Modern cryptography is based on advances in number theory and abstract
algebra. None of the mathematicians over the last 2 centuries who contributed
to those advancements foresaw the applications.

Modern GPS satellites are dependent upon general and special relativity.
Einstein never foresaw it.

Much of the military industrial spending that funded the creation of Silicon
Valley was not specifically targeted at creating the industries that followed.

The whole point of basic R&D is you don't know the economic outcome. It is a
quest for knowledge. It may create the next disruptive technology or industry,
or, it may not, and just be a another curiosity to be studied by academics.

It's a double edged sword, but why should we want swords with only one edge
(short term economic success)?

Microsoft R&D funds for example, like IBM, mathematic researchers. These
people are not working on products or applications, they're working on proving
theorems.

I don't fault Microsoft for "wasteful" spending. Research and Development is a
genetic algorithm for searching the fitness frontier of knowledge space. A
whole lot of organisms, or ideas, have to die, before local optima can be
broken out of to find the next peak.

~~~
blah32497
"100 failures for every 1 success"

There aren't a lot of examples of big tech companies dumping money into R&D -
with no end goal in mind - and then cashing out big time. Even companies that
that have gotten useful discoveries from hiring smart people to sit around and
invent (Bell Labs, Xerox Park, Microsoft Research etc.) don't ever seem to end
up raking in the big bucks.

The only thing that comes to mind is MS and their Kinect.

Unfortunately the ROI is pretty bad when you just throw money and hope it
gives you results. It's cheaper to just buy up startups with interesting ideas

~~~
cromwellian
All of the startups you're talking about are sitting on the shoulders of much
longer term R&D that was funded by corporate labs or government/academic R&D.

When was the last time a small startup produced a huge breakthrough in physics
or manufacturing that did not build off of research funded by the public or
big consortiums, corporate labs, or universities?

I don't care if Bell Labs didn't cash out, just like I don't care if NASA,
DARPA, or Sandia Labs makes a profit. Quantum Theorists need work too, and
Y-Combinator isn't going to fund them.

~~~
blah32497
"I don't care if Bell Labs didn't cash out"

Yeah, well that's nice that you don't care - but Apple's shareholders do. The
point is that this kind of R&D doesn't pay-off. Companies have tried it in the
past and it didn't work.

If you want R&D then I completely sympathize, but you'll have to go get your
government to fund it - don't expect Apple do it as a charitable donation to
society.

PS: Examples like Leap Motion come to mind.

~~~
cromwellian
That's an unsupportable blanket claim. Such research approaches have paid off
in the past. Take IBM:

Invented: * DES * Hard Disks * DRAM * RISC * Relational Database * Laser Eye
Surgery * Barcodes * PC

Apple shareholders apparently care, because the company is currently being
valued as if there are no more disruptive breakthroughs that will produce
significant growth in its bottom line.

Also, to say Bell Labs didn't cash out is to be charitable. Ma Bell dominated
for decades before the government broke them up. Did they fail because of
failure to cash out on inventions, or because Bell Labs was split off from the
parent company that was funding them.

Also, if you suggest the government fund it, then maybe the government tax
Apple's cash, I wonder how their shareholders will like that?

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colinbartlett
Pie chart: The world's worst way to display time-series data.

[http://o.aolcdn.com/hss/storage/adam/2c59e6862a532820a9854bd...](http://o.aolcdn.com/hss/storage/adam/2c59e6862a532820a9854bd3e7517688/Apple%20R&D%20Piechart.png)

~~~
doktrin
For the statisticians and data scientists in the room : do pie charts _ever_
have a valid use case (as defined by being superior to another form of
visualization)?

~~~
srv02
Of course. Pie charts look natural and easy to comprehend when visualizing
things like market share of certain products, for example browser market share
([http://www.netmarketshare.com/browser-market-
share.aspx?qpri...](http://www.netmarketshare.com/browser-market-
share.aspx?qprid=2&qpcustomd=0)). In fact I'd argue that that's a much better
representation than a bar chart, like
[http://www.w3counter.com/globalstats.php](http://www.w3counter.com/globalstats.php),
because the former makes it easier to comprehend roughly what proportion of
the total market each browser represents, which is not as straightforward to
see in a bar chart (in bar chart it's only easy to see how different browser
market shares compare to each other). So yes, pie charts may be appropriate at
times, although I agree that it's a poor choice in this particular case, as
the root comment explains.

~~~
bodhi
How about a stacked single-bar chart? I'd suggest that it has all of the
benefits of a pie chart without introducing perception issues of angles and
areas.

Well, I guess you could make a fat bar and still run into problems... Ah,
visualisation!

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twoodfin
I am not an expert, but it's my understanding that what is R&D vs. "only"
engineering is largely an accounting question. I don't think Microsoft is
spending all of that $10B on MSR, for example.

As a metric I don't think it provides much insight.

~~~
antr
you are spot on with that thought. accounting for r&d is pretty much an
accounting/financial call. rather than accounting for costs, you capitalise
that cost/capex as an asset, which can later be amortised in x years. i'm
guessing that given that apple generates billions in profits, it would rather
account much of its r&d as an operating expense, reducing the immediate tax
bill.

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umsm
[http://o.aolcdn.com/hss/storage/adam/3924d8cabc4e8469af6fa91...](http://o.aolcdn.com/hss/storage/adam/3924d8cabc4e8469af6fa91259881564/R&D%20global%202013.jpg)

One question: Why is VW's R&D spending so high? It's BILLIONS more than other
car manufacturers.

~~~
chebum
They build cars in many segments. Tesla build one model, while VW has 27
models (from their german website) + commercial vehicles. Also, they own
several brands like Audi, Bentley and some others. Most of them has a wide
model range.

~~~
james4k
Yeah, take a look:
[https://en.wikipedia.org/wiki/Volkswagen_Group#Subsidiaries_...](https://en.wikipedia.org/wiki/Volkswagen_Group#Subsidiaries_and_marques)

Bugatti and Lamborghini are fun to note, though probably insignificant against
VW's entire R&D budget.

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iaskwhy
This could be interesting to analyse but those charts are not really the best,
mainly the pie chart. Maybe the best way to look at research costs is to
compare it to the other costs of the company (maybe with the exception of
those related to the cost of building the products).

I'm in no way an analyst so I might be way off on this recommendation though.

------
Guvante
The article feels a little shallow on the analysis side.

For instance I would expect this oddity to be caused by the fact that they
aren't a traditional hardware manufacturer (they don't have any fabs and
outsource their production) nor are they a traditional software manufacturer
(their software focus pales in comparison to Google or Microsoft).

Since developing silicon and software are two of the biggest drivers in the
industry and Apple doesn't focus on either, it makes sense they have a low R&D
budget.

~~~
josefresco
"they don't have any fabs"

Isn't this not true anymore? I thought Apple brought chip production "in
house" as well as other specific hardware related to their iOS products.

~~~
dragontamer
You are correct. Apple just spent billions of dollars buying up a fab lab.
However, it will be years before this investment sees any practical use at
Apple.

[http://semiaccurate.com/2013/07/12/apple-has-their-own-
fab/](http://semiaccurate.com/2013/07/12/apple-has-their-own-fab/)

~~~
gress
Is there a link to substantiate that claim that doesn't put the information
behind a paywall?

~~~
dragontamer
Not one that I know of.

Charlie isn't the typical blogger though, and I prefer his paywall style over
the ad-based models that other sites have done. When Charlie wrote a few
honest (but blasting) reports on various companies a while back... the ad-
companies held his revenue hostage. They didn't like him writing the way he
did. As such, he stopped doing ad-hosted content and was forced into the
paywall model.

Now to be fair, Charlie is a bit rambunctious and exaggerates some claims, but
his fact-gathering tends to be months or years ahead of others (Do a double-
take at the date of this article: [http://semiaccurate.com/2012/03/02/sony-
playstation-4-will-b...](http://semiaccurate.com/2012/03/02/sony-
playstation-4-will-be-an-x86-cpu-with-an-amd-gpu/). I personally can verify
the date on that article, as I read the article when it came out and didn't
believe it.) . His writing style is abrasive though, and ad companies didn't
want much to do with him.

He gets things wrong sometimes, because he's really trying to predict the
future. But since he gets things right more than 50% of the time, I'm pretty
confident in his claims. Overall, he does good work. It is unlikely that other
sites will have his information for another few months at least.

~~~
gress
There are a whole bunch of other sites linking to this piece calling it a
_rumour_ , and that there is little detail beyond the paywall and no
corroborating evidence since then.

I think it's false.

~~~
dragontamer
Fair enough. As I've said before, Semiaccurate is only "mostly" correct.
Charlie has been wrong before, mostly because he pushes (likely)
hypotheticals.

I have however, read the contents behind the paywall, and Charlie is quite
specific. He has the company name, some vague details on the deal, and the
location of the facility.

He is stretching the hypothetical a bit to say that "Apple bought a
fabrication lab". That may have gone to far... but those details are discussed
in the paywalled article.

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grannyg00se
Perhaps they spend slightly less than others, but what interests me is that
there is an exponential growth of R&D spending over the last five years with
no real innovation (in my opinion, since the iPhone). And Microsoft has been
spending consistently around 15% of their revenue on R&D. For what? Higher
pixel density and an OS with tiles that can be swiped on touch screens? Is R&D
really that low ROI? We're talking about _tens of billions_ of dollars here.

~~~
amenghra
In a lot of cases, you won't notice the result of every dollar spent on R&D
(until much later on, when the technology becomes mainstream). For e.g. siri:
might just seem like voice-to-text to you, but there's probably a ton of stuff
happening in the backend in the fields of ai, scalability, personalization of
the results, etc. Some of this stuff might have been known problems with known
solutions, other things might have been applied research.

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ArbitraryLimits
Normalize to show percent of revenue and then we'll talk.

A time series of $$$ allocated to R&D is basically going to show when the
company's growing and when it's shrinking, the same way a heat map of who
clicks on furry porn is basically going to show population density.

I realize there's a chart of $$$ allocated to R&D as a percentage of _sales_
but that's not quite right either.

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mempko
The best chart shows percent of sales. Shows how lazy they got the last couple
of years ;-)

~~~
dclara
Agree. They are waiting for other companies to provide more inventive
technologies, ;-)

