Apple's R&D spend reaches record high; execs excited as new products loom

Read between the lines of last night's Apple [AAPL] fiscal call (and take a look at its financial statements) and it's crystal clear new products are coming as the company's r&d spend this year dwarfs what it spent in the year before iPhone.


[ABOVE: Tracking Apple's R&D spending -- I spent a pleasant afternoon figuring out just how much cash Apple's been spending on R&D since 1999. Turns out its shot up tenfold.]

R&D hits record levels -- but no products, yet

In Apple's fiscal year 2006 the company spent $712 million on R&D and a few months later launched iPhone. The company now spends more than this in research and development in a single quarter --so far this fiscal year it has already spent $3,307 million on R&D following its $3,381 million spend in its last financial year.

That's over $6,600 million dollars spent researching new products during a period in which the company has introduced few products of great consequence, beyond revamped Macs, iPads, the iPad mini and iPhone 5. Given the company spent a fraction of that in the year before the iPhone this sure begs the question, where's all this money going?

It has to be going somewhere, yet in the last few months Apple has disappointed fans and critics with a product release cycle that seems to have headed off on an extended vacation. Apple's historically high R&D spending just doesn't equate with those new solutions we've seen from the company.

Apple's executive team have been working on something, and has already suggested the fruits of these labors are set to begin shipping in Fall, while most market rumors also point to winter's turning for the debut of new devices. Devices which have cost the company many millions of dollars to develop across the last two years.

Apple's execs are excited

"Apple can't innovate, my ass," said Apple VP marketing, Phil Schiller at WWDC. His statement may have come as the company announced a new Mac most Apple users won't choose to buy in the shops, but to me it confirms the pent up excitement felt by the company's top brass as they prepare to reignite the Apple story all over again.

There were more hints of this last night. Apple CFO, Peter Oppenheimer, last night avoided becoming drawn into discussion of new products or strategies, saying he'd talk more about these "in October". (Source: Seeking Alpha).

Gene Munster of Piper Jaffray tried to get through the traditional Apple secrecy, asking, "Are there product categories out there that are big enough to move the needle for Apple?"

Apple CEO Tim Cook deftly avoided that one, saying only: "We will see, Gene. We are working on some stuff that we are really proud of and we will see how it does, and we will announce things when we are ready."

Answering a different question, Cook also said:

"There is always more weapons. And we have more than one tool in the toolbox."

What analysts, Apple watchers and Apple's emulative enemies don't yet know is just what, or how many weapons the company has put together for its near $7 billion r&d investment across the last seven financial quarters.


It's only a matter of weeks now until we all find out… analyst Maynard Um of Wells Fargo Securities reckons the next generation iPhone announcement will take place on September 27.

This might be the first in what's widely expected to be a flurry of shiny new gadgets the company's spent its billions putting together, aiming to (as Tim Cook explains):

"We started the product because we believe that the most important saying is that our customers love the products and want them, if you don’t start at that level you can wind up creating things that people don’t want. So we try very hard to focus on products and customers, enriching customers and making great products."

Just how much great has Apple put together for its money?

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Copyright © 2013 IDG Communications, Inc.

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