Apple’s R&D spending proves innovation isn’t all about money

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Apple's building a new office in San Jose.
Photo: Apple

When it comes to innovation, Apple is proving that it’s not all about the money.

While competitors like Google, Facebook and Qualcomm dump huge percentages of their revenue back into R&D on projects like autonomous cars and Internet drones, a recent Bloomberg report highlights how Apple has gotten the biggest bang for its buck in R&D, despite spending less than any other major tech company.

Apple only spent 3.5 percent of its $233 billion in revenue on R&D in 2015. Its biggest rival, Google, used 15 percent of its revenue on R&D, while Facebook spent 21 percent and Qualcomm tossed 22 percent back into research.

R&D spending has never been a priority for Apple. Steve Jobs once said that “innovation has nothing to do with how many R&D dollars you have,” pointing to the development of the Mac while IBM spent 100 times more on research.

So how does Apple maintain its reputation as one of world’s most innovative companies if it doesn’t spend a lot on innovation? It depends on suppliers to provide the breakthroughs.

Getting your company’s chip, screen or camera module in the newest iPhone is a hugely competitive business — and it allows Apple to direct its supplier’s research. Ram Mudambi, a professor at Temple University in Philadelphia, explained to Bloomberg that Apple’s size motivates suppliers to pitch the company their biggest breakthroughs.

Apple isn’t relying solely on suppliers, though. The company has increased R&D spending to $8.1 billion in 2015 after spending only $4.5 billion in 2013. Semiconductors for the iPhone and iPad have been the company’s biggest investment, but with the Apple Car also in development, the company’s R&D budget is likely to rev up even higher in the next few years.