- Apple has become one of the biggest investors in research and development in the world.
- It has consistently upped its R&D spending every year for the last 20 years.
- Lately, it’s also been increasing the portion of its revenue it devotes to research.
Apple has consistently upped its research investment
Steve Jobs famously slashed Apple’s R&D budget when he returned to the company in the late 1990s. Since then, though, the iPhone maker has increased its research budget every single year.
In its last fiscal year, Apple spent $14.2 billion on R&D. That’s more than Apple’s entire revenue 15 years earlier and 18 times more than it spend in 2007, the year it launched the iPhone.
But the portion of its revenue Apple has devoted to R&D has gone up and down over time.
Around the turn of the century, Apple was spending well more than 5% of its sales on R&D as it tried to recover from its near-death experience in the late 1990s. That investment resulted in a string of hits — the iPod and iTunes and later the iPhone and iPad — that turned its business around and turned Apple into a tech giant.
As Apple’s sales soared, its R&D investment didn’t keep pace and reached a nadir in its 2012 fiscal year, when the company devoted just 2.1% of its revenue to its research effort. Since then, though, the company has been gradually devoting more and more of its sales to R&D. In its last fiscal year, Apple spent 5.4% of its revenue on research and development — the highest allotment for its R&D effort in 13 years.
Apple still devotes far less of its revenue to R&D than other big-tech companies
Despite its ramp-up in research spending, Apple’s effort still trails behind many of its big-tech rivals. Companies such as Facebook, Alphabet, and even Netflix spend much larger portions of their revenue to R&D than does Apple.
Of course, what counts as a research-and-development expense can vary widely between companies and even within them. At Apple, it includes researchers working on its self-driving car effort and developing computer chips for future devices. At Facebook, it includes engineers who are tweaking existing features on its social-networking service.
But Apple’s R&D effort is in the mainstream among big companies
Apple may not match its tech peers when it comes to how much of its revenue it spends on R&D. But when its effort is compared with other big US companies, Apple doesn’t really look like a laggard.
It doesn’t devote nearly as much of its revenue to research and development as companies like AbbVie or Merck, but those are pharmaceutical companies, which historically make huge investments in trying to develop the next hit drug. Meanwhile, Apple spends more on research and development as a portion of revenue than companies such as General Motors and GE and almost as much as IBM, all of which have long-established reputations for their research programs.
And in terms of sheer dollars, Apple outspends those companies
Partly as a function of the size of its overall revenue, Apple’s R&D budget is truly huge in terms of the sheer dollars it spends. It’s bigger than the vast majority of companies inside and outside the tech sector.
Its R&D budget now ranks among the top in the US, rivaled only by other big tech peers
In the US, the top spenders on R&D are all in the tech sector. And Apple has taken its place among the biggest investors, topping Facebook and starting to rival Microsoft.
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