Apple Spends Just 2% Of Its Revenue On R&D

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Despite a budgetary increase of 32% from $3.381 billion in 2012 to $4.475 billion in 2013, Apple still spends less than 3% of its revenue (net sales total $170.91 billion so far this year) on Research & Development of new products: something that will surely give ammunition to those skeptics who claim less innovation is taking place under Tim Cook’s command than it ever did while Steve Jobs was at Apple’s helm.

Right?

Not so much actually. Although Apple’s R&D spending is considerably less than, say, Microsoft — which has pumped around 13% of its $77.849 billion revenue into R&D during fiscal 2013 — what has historically proven true is that companies that throw large sums of money into research rarely prove to be the ones who pump out genuinely innovative products at the end. As Forbes noted in an editorial last year,

“The companies most known for innovation don’t keep spending money year after year on their old business.  Instead of digging deeper into what they already know, they invest laterally.  They spend money putting the pieces together in new, unique ways.  They try to find new solutions to old problems, using new – even fringe – technologies.  They try to develop disruptive solutions that actually change the marketplace, rather than trying to make something that already exists better, faster or cheaper.”

While Apple has certainly innovated, it has never been a company that has spent an exorbitant amount on R&D.

As Steve Jobs himself said, “Innovation has nothing to do with how many R&D dollars you have … It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”

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About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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