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Apple skimping on R&D budget?

updated 09:40 am EST, Wed March 15, 2006

Apple: Frugal to a fault?

Despite Apple's recent success, the company may be skimping on its research and development budget, which could impact its ability to bring new, innovative products to market, according to a new column at Troy Wolverton notes that Apple's R&D spending has fallen, as a portion of sales, every year since fiscal 2001, when the company devoted 8 percent. "Even while Apple's revenue has skyrocketed in recent years -- and even as expectations for future products and success have exploded -- what the company has spent on R&D has risen only modestly. As a portion of overall sales, such expenses have actually fallen by more than half. Though analysts generally praise Apple for its frugality, some warn there's a limit to how much longer the company can squeeze juicier near-term profits out of its R&D line."

by MacNN Staff





  1. Gorloth

    Joined: Dec 1969


    Oh Yes

    Oh Yes and Apple will be out of business 10 years ago. This is still umpteen times more money than Dell spends on R&D. Does anybody see a lack of bette rproducts coming out of Apple. Record sales. $20+ billion this year.

  1. Paul Huang

    Joined: Dec 1969


    Anything for a few hits

    What is Dell's revenue? What is Apple's revenue? (a fraction of Dell)

    How much does iPod sales account for Apple's recent revenue gain?

    What is Dell's R&D? What is Apple's R&D?

    Whoever said that R&D must grow proportionally with revenues?

    Is the writer brain dead? Doe he or she knows how to research?

    Anything to generate hits. Maybe the reporter's/writer's job has changed.

  1. MCCFR

    Joined: Dec 1969



    What a ridiculous statistic.

    If the company was still investing 8% of sales to R&D, the R&D budget for this quarter alone would be $128 million alone just from iPods.

  1. RetiredMidn

    Joined: Dec 1969


    There's only so far...

    ...ahead of the rest of the industry Apple (or anyone else) can afford to be, as they discovered with the Newton, and maybe even FireWire (I doubt Apple has recovered its investment in that).

    Also, Apple could probably do better than Origami in the ultra-portable space, but it wouldn't matter if there's no market yet.

    Apple undoubtedly has a bunch of stuff developed and on hold until the business model can support it; why spend more on R&D and increase the backlog?

  1. ibugv4

    Joined: Dec 1969


    it's the truht, folks

    Apple isn't innovating. The iMac G5 desing is what everyone EXPECTED with the G4, and now it looks like a half-assed attempt or worse an AFTERTHOUGHT. They need better R&D.

  1. MCCFR

    Joined: Dec 1969


    Real numbers

    Just to prove a point.

    Excluding iPod sales, Apple's R&D percentages for FY2005 and FY2004 were 8.50% and 9.93% respectively.

  1. mouseketter

    Joined: Dec 1969


    If the current products

    If the iPod with video and Nano, or the current iMac are the result of R & D on the cheap give me frugal over spend thrift anytime.

    Sounds to me Apple is just more efficient and can do more with less.

  1. starwarrior

    Joined: Dec 1969


    Bean Counters Distroy

    Typical Bean Counter Mumbo Jumbo.

    More is not better.

    Innovation cannot be scheduled versus dollars.

    It distroyed NASA. It distroyed Missile Defense. It distroyed FEMA. It is distroying Sony and Microsoft.

    Keep core small and smart and fast moving as it was at startup when energy and direction are set.


  1. aristotles

    Joined: Dec 1969


    He is clueless

    Hasn't this guy read the mythical man month? You cannot just throw more people at the problem and expect to get more or faster results.

    There is a certain size teams can get before it stops working or you end up with diminishing returns because larger teams often require more management overhead to keep things on track.

  1. rspress

    Joined: Dec 1969


    I agree with the writer

    Apples lack of R&D spending is starting to show. True they have had quite a few winners of late but what really went into the new Macbooks that made them worth more than a PC laptop? Just the Mac OS?

    Apple has always poked fun at Intel chips and on chip graphic cards yet the Macbooks have both. Things are even worse in the design end of things. Let’s face it....white is getting pretty old. Apple had a real chance to set the new Intel Macs apart from any Mac or PC both in design and features yet they have fallen short on both counts. They are good computers but given a choice I would take the PowerPC counterpart. Many are also worried about the Intel machines lack of being able to run the classic environment. I could care less about classic, I have not used it in years but I think the Mac Intel sales would be much greater if classic would run in some form.

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