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Bloomberg: ‘Apple Gets More Bang for Its R&D Buck’

Adam Satariano, writing for Bloomberg:

Compared with its resources, Apple has remained relatively quiet. It spent just 3.5 percent ($8.1 billion) of its $233 billion in revenue in fiscal 2015 on research and development, a lower percentage than every other large U.S. technology company, data compiled by Bloomberg show. By contrast, Facebook spent about 21 percent ($2.6 billion) on R&D, chipmaker Qualcomm 22 percent ($5.6 billion), and Alphabet 15 percent ($9.2 billion).

Apple’s success belies the conventional wisdom that a leading tech company must reinvest a sizable chunk of its sales in R&D or risk being overtaken. Apple has never subscribed to that philosophy. Steve Jobs said in 1998 that “innovation has nothing to do with how many R&D dollars you have.” He liked to point out that when the Mac was introduced, IBM was spending about 100 times more than Apple on research.

I’ve always believed (and there are many public statements from him that back it up) that Jobs was averse to “pure” research and development spending — meaning research for the sake of research itself. Jobs wanted it to be product-focused. Figure out exactly what you want to make, then do the research to invent what you need to make it. Lots of great things (Unix, to name a big one) have come from companies that do or did spend big on pure R&D, but it’s seldom wound up benefiting the companies doing the spending.

Tuesday, 1 December 2015