Neil Cybart on Apple’s R&D Spending

Neil Cybart, writing at Above Avalon about the lack of attention Apple watchers seem to be paying to the company’s R&D spending:

I suspect most of this has been due to the fact that Apple does not draw attention to its product pipeline and long-term strategy, choosing instead to embrace secrecy and mystery. Now compare this to Mark Zuckerberg laying out his 10-year plan for Facebook. It is easy and natural for people to then label Facebook as innovative and focused on the future. The same principle applies to Larry Page reorganizing Google to make it easier for investors to see how much is being spent on various moonshot projects. Jeff Bezos is famous for his attitude towards failing often and in public view, giving Amazon an aura of being a place of curiosity and boldness when it comes to future projects and risk taking.

Meanwhile, Tim Cook has remained very tight-lipped about Apple’s future, which gives the impression that Apple isn’t working on ground-breaking ideas or products that can move the company beyond the iPhone. Instead of labeling this as a mistake or misstep, Apple’s product secrecy is a key ingredient of its success. People like to be surprised. Another reason Apple takes a much different approach to product secrecy and R&D is its business model. Being open about future product plans will likely have a negative impact on near-term Apple hardware sales. Companies like Facebook and Google don’t suffer from a similar risk. The end result is that there is a legitimate disconnect between Apple’s R&D trends and the consensus view of the company’s product pipeline. Apple is telling us that they are working on something very big, and yet no one seems to notice or care. I find that intriguing.

From Cybart’s opening:

There are only a handful of logical explanations for Apple’s current R&D expense trajectory, and all of them result in a radically different Apple. In a few years, we are no longer going to refer to Apple as the iPhone company.

People who don’t understand Apple assume that the company is, or should be, almost singularly focused on riding out the iPhone gravy train for as long as possible. There are so many great Steve Jobs quotes, but this is the one that hangs prominently on the wall at Apple’s Infinite Loop headquarters:

If you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what’s next.

★ Friday, 13 May 2016