How Much Apple Invests in Research and Development

Apple is arguably one of the most successful companies throughout history. The last two decades has indeed put Steve Jobs and his legacy on the map. The rise of Apple has seen a steady increase thanks to their 2007 world changing product; the iPhone. In the beginning of August 2018, the tech giant reached the glorious milestone of becoming the first ever trillion-dollar company.

Apple began its journey as a personal computer manufacturer, but over the last quarter of a decade, as previously mentioned, have expanded into a whole new row of sectors. With more than 500 retail stores worldwide, employing close to 135,000 people in those stores alone, Apple rakes in an estimated world leading amount of 259 billion dollars a year (2018), with Amazon (232 billion USD) and Samsung (211.2 billion USD) closely trailing behind.


Apple Research and Development Spending

Even though the California-based company is stacking their profits by the second, Apples innovation and forward thinking shouldn’t be left overlooked. By having a quick look at their 2009 financial report, the figures for research and development investment landed around the one-billion-dollar mark.

Fast forwarding to present day, we can spot the outlines of the tech giants drive for further innovation. The projected numbers are currently estimated at $13 billion this year, not including stock-based compensation, according to Bank of America analyst, Wamsi Mohan.


Preparing For The Future

The increased research and development investments implies that the work on projects are going well beyond routine product maintenance. Potential areas of research include an expansion to augmented reality innovations and new technologies which could threaten its dominance in smartphones and tablets, as well as investing in technologies that could help the iPhone enter new product categories such as wearables, fitness and health.

“The patents around wearables suggest that Apple could be targeting AirPods with biometric sensors, Apple Watch with UV monitoring, gesture recognition for AR/VR applications, machine learning projects to enable autonomous driving and integration of various existing devices with a car,” Mohan states.

The analyst continues by saying investors are focusing on the “apparent lack of ongoing innovation at Apple,” but that they believe Apple is appropriately investing in new product categories.

“When the iPhone (once in a generation product) becomes the basis of comparison, everything else, however successful, looks incremental,” the analyst writes.

“The wearables business in just 4 years is the size of a fortune 200 company with [estimated] $15 billion in sales (similar to NetflixPaypal etc.) but the sheer size of the iPhone of $155 billion in 2018 (similar to General Motors) dwarfs the rapid growth of the relatively smaller businesses, ” Mohan concludes.


Further Investments

Furthermore, other Apple investments include the remnants of "Project Titan," Apple's own attempt to construct a full self-driving car platform from scratch. Refocused into smaller teams, the apple innovation is now thought to be developing autonomous driving technology using specialized sensor equipment and software installed on Lexus testbeds. 

Apple also continues to invest in outside technology through mergers and acquisitions. On Thursday, CFO Luca Maestri stated the company acquired 19 smaller firms over the course of 2017.

In December, Apple snapped up popular song recognition service Shazam for an undisclosed sum. Other reported purchases include AR headset startup Vrvana, wireless charging firm PowerbyProxi and "dark data" specialist Lattice Data. 


The CEO’s Vision

Steve Jobs successor and current Apple CEO, Tim Cook, has shared the Apple mantra through recent interviews and provides hints of what’s to come for the ever growing tech company.

“We manage the company for the long term. The most important things in Apple, one, a culture of innovation. This team is unbelievable in creating hardware and software and services and getting them all to work together. It just Works.” Cook says.

“I’m never surprised by the market, to be honest with you. Because I think the market is quite emotional in the short term. And we sort of look through all of that. We think about the long term. And so, when I look at the long-term health of the company, it has never been better.”

According to Cook, he’s not worried about the iPhone sales cooling down, and remains positive about future products. “The product pipeline has never been better. The ecosystem has never been stronger. The services are on a tear. If you look at, let’s just take wearables as an example, right? Wearables, it’s mainly the Apple Watch and AirPods.”

“If you look at this, and on a trailing basis. I’m not projecting. On a trailing basis,  we’ve already exceeded the revenue for wearables more than 50 percent than iPod was at its peak. Now, this is a product that I think everybody would say it was an incredibly important product for Apple, full of innovation, and probably, the trigger for the company getting on a very different trajectory and into other markets.” The Apple CEO concludes.

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