IT's Big Spenders

TechEGrl writes "R&D spending increased by 17 percent in 2006, according to a new report on CIO Insight that ranks the top 81 R&D spenders. The spending was mostly targeted at consumer rather than business products, though Microsoft — not surprisingly the biggest spender with an investment of $6.58 billion — did throw significant change at biz apps like the Vista operating system. Investment in Internet search was dominated by Google, which more than doubled its R&D spending in 2006 and far outpaced competitors like Yahoo and eBay."

Comments

Arachnophobia

[Anonymous Coward]

I hate big spiders.

WTF?

[thetroll123]

>biz apps like the Vista operating system

Whoever wrote this nonsense really needs to get off the drugs.

Re:WTF?

[nietsch]

Exactly what I thought. Why are we supposed to read the fscking article when the summary (most likely lifted from TFA) boasts this nonsense.
Oh wait, I could also abstain from this unavoidable flamefest. I read something about shoemakers instead. Shoes are worn in businesses, so they are biz apps too!

Re:WTF?

[Asmandeus]

I recommend they get ON the drugs. All of them! They taste like Skittles. Easy ordering and fast delivery.

Interestingly..

[dragonquest]

Interestingly Google is tagged under 'Software' rather than 'Internet Services' like Yahoo. Probably a sneak peek at what's to expect.

#12 Symantec ?

[El_Muerte_TDS]

What R&D, except the usual "how can we made our products even more bloathed", do they do? They spend even more money than nVidia and Apple.

Re:#12 Symantec ?

[dragonquest]

A lot of people only look at Symantec's home user security products, but a lot of cash from R & D would flow towards some of its enterprise class products like NetBackup, which because of its sheer complexity of development would require a lot of dough.

Re:#12 Symantec ?

[zenmojodaddy]

Bloathed?

Is that like beloved, but the other way around?

Re:#12 Symantec ?

[owlnation]

Bloathed - Bloated and loathed?

Nice piece of (accidental?) portmanteau-ism! Symantec, is most surely bloathed.

Re:#12 Symantec ?

[Colin Smith]

A lot of people only look at Symantec's home user security products, but a lot of cash from R & D would flow towards some of its enterprise class products like NetBackup, which because of its sheer complexity of development would require a lot of dough. And how does this contradict the grandparent's point? Netbackup is a perfect example of the "Big Ball of Mud" development methodology. Oh and I dispute the definition of Netbackup as "enterprise class". At best, it's workgroup class with pretensions.

Re:#12 Symantec ?

[JaySSSS]

If you look at the number of Enterprise companies using NetBackup, I think one would agree it is enterprise software. Yes, it has flaws for large enterprise infrastructure, but I don't think large Fortune 100 companies would be using it extensively if it weren't a useful "enterprise" product. I think the only reason Symantec has any real enterprise presence is because of their purchase of Veritas.

Re:#12 Symantec ?

[Colin Smith]

If you look at the number of Enterprise companies using NetBackup, I think one would agree it is enterprise software. Actually no. The operative word being "class".

In reality it's a kludgy pile of crap which I personally have had the extensive displeasure of installing, configuring and using in an enterprise environment. It's used primarily because it's cheap and it can tick most of the boxes, whether it actually works adequately or not with respect to the various ticked boxes is an entirely different matter. There are several far superior systems that could conceivably called enterprise class.

Re:#12 Symantec ?

[dragonquest]

So you are trying to tell me, NetBackup users, and I mean real huge organisations, make underground, nuclear-safe vaults, trust their 500+ terabytes of data (not to mention the amount of green they spend in installing and configuring it), trust a product which is not really only an extension of a mediocre product? SAN's are valuable commodities. Nobody purchases Netapp filers, if all they want to do is backup stupid email forwards using mediocre backup software. If Symantec is doing well in this field with competition like Tivoli, Commvault and all, they must be doing something right.

I'll see your girlie 81 and raise you 1000

[djupedal]

The text says 'top 81', then the article says 81 businesses were selected and appraised. The text labels Microsoft as being the biggest spender, at $6.58 billion, while also labeling this as 'software' related. The article points out how MS spent big on the latest XBox, which is hardware...someone needs to make up their minds. All-in-all, pretty sloppily written piece. But hey...it's a slow news day, so what the heck.

For a bit of fun perspective, China spent $136 billion on R&D in 2006.

And who could forget the Nov. 2006 study from Booze Allen Hamilton, which stated:
"R&D spending doesn't guarantee business success" - New study reveals that there is no relationship between R&D spending and sales growth, earnings, or shareholder returns.

The Booz Allen Hamilton study "Global Innovation 1000--Money Isn't Everything" analyzed the world's top 1,000 corporate research and development spenders.

It found remarkably that the pace of corporate R&D spending continues to accelerate, as many executives continue to believe that enhanced innovation is required to fuel their future growth.

Spending more doesn't necessarily mean gaining more. The study identified individual success stories. More pointedly it found no discernible statistical relationship between R&D spending levels and nearly all measures of business success, including sales growth, gross profit, operating profit, enterprise profit, market capitalization, or total shareholder return.

Booz Allen Vice President Barry Jaruzelski said: "Successful innovation demands careful coordination and orchestration both internally and externally. How you spend is far more important than how much you spend."

I pfft in your general direction!

Re:I'll see your girlie 81 and raise you 1000

[Anonymous Coward]

It's also worth mentioning that the list is far from complete: for instance, Nokia put 3825 million euros, or 3230 million dollars to R&D at 2005. More recent data would probably give even more prominent position on that list. One can only wonder what other companies are left out.

Re:I'll see your girlie 81 and raise you 1000

[arehnius]

The title is kind of misleading, since I assumed, just like you, that it was world-wide. But this is not the case here, and it's only for the US.

Re:I'll see your girlie 81 and raise you 1000

[Chrisje]

sheesh, I work for HP, the fourth spender. You may fart in my general direction, but my recommendation for you is to stay the hell off the Booz.

Re:I'll see your girlie 81 and raise you 1000

[Red Flayer]

For a bit of fun perspective, China spent $136 billion on R&D in 2006.

That's overall R&D, not software R they just passed Japan for the #2 spot, (Japan spent $130Bn in 2006).

The US R&D spending amount was far higher -- $330Bn approximately. US pharma companies alone spent $55.2Bn on R&D in 2006.

Re:I'll see your girlie 81 and raise you 1000

[hackstraw]

"R&D spending doesn't guarantee business success" - New study reveals that there is no relationship between R&D spending and sales growth, earnings, or shareholder returns.

I can agree that R&D spending does not guarantee business success. Business is a risk. Luck and timing is involved, but w/o R&D, where would we be today?

Xerox's R&D gave us the GUIs that we use today. Bell gave us the OSes we use today. R&D gives us portable pocket cell phones instead of the car phones from years ago, and phones where you had to call the operator to get through to the other person.

R&D does not guarantee business success, but most every sucessful business does R&D. Microsoft has an excellent R&D department, but their ability to put their research into products is abismal. Just about every successful business or person has to continually learn new developments and technologies.

I havn't done a formal R&D study on this, but I would agree that R&D does not guarantee business success, but for most businesses, I would say that the lack of R&D spending or at least keeping up with newer technologies will almost certainly gaurantee business failure.

R&D

[Psychotria]

Correct me if I'm wrong... but, to me, Research and Development when used together kind of imply creating something new. Meaning that you research an idea and develop a solution. I'm not sure that researching somebody elses solution and then implementing a solution that is the same solution that you researched qualifies for R&D. Research yes, development... Therefore, I disqaulify MS from the list.

Re:R&D

[El_Muerte_TDS]

Correct me if I'm wrong... but, to me, Research and Development when used together kind of imply creating something new.

No it doesn't. Performing research into improving current technologies is also research, the result will not be something new, but something better. It would be interesting to have a list of how much companies invest in fundamental research.

Re:R&D

[Psychotria]

Yep, you're right. Which is why I said: "researching somebody elses solution and then implementing a solution that is the same solution that you researched..." Same solution means it's not better (nor worse) than the original. However, I do agree that implementing a superior solution as the result of research is a good thing.

Re:R&D

[Anonymous Coward]

Maybe you should spend some time reviewing the initiatives coming from the MSR labs. Microsoft has for years invented and innovated. I'm sure you will disagree, but that would be like me saying there is no sun just because I've lived in a dark room my whole life.

Yukyukyuk

[Anonymous Coward]

[found in an archive of financial/editorial cartoons...]

Sign over open office door reads "Dell Computer R & D" - There is one guy inside the office, feet on desk, leaning back in his chair, reading latest WWF monthly, and another guy leaning in the door, asking a question. Room is empty except for the wrestling fan, the desk and a few cobwebs...

"Hey! Mikey! What's new..?"

Guy in chair shrugs and responds "Nothing right now - just waiting for Apple to release their next Mac..."

Re:Yukyukyuk

[Anonymous Coward]

Why should Dell have an R&D department? They're a hardware vendor, not a developer. If you expect your new Dell machine to be built from cutting-edge, developed-five-minutes-ago hardware, your expectations need to change.

Oops

[Anonymous Coward]

3825 million euros was 4530 million dollars back then, of course. Hrm.

In Soviet russia

[renegadesx]

In soviet Russia IT spends YOU!

...and they still get it wrong

[peterprior]

$6.58 billion on R&D and they still have dialog boxes like this.

Incredible.

Re:...and they still get it wrong

[citizenr]

you mean like this one ?

http://librarian.launchpad.net/7329776/Screenshot. png

https://bugs.launchpad.net/ubuntu/+source/debconf/ +bug/106505

Don't Know What They're Spending it On

[segedunum]

Well, I can't fathom what Microsoft are spending $6.58 billion dollars on, especially with regard to Vista(!?). They're getting ripped off. That's the problem when a company gets that large. It starts to act rather like an organisation in the public sector, with countless departments being needlessly created, consuming inordinate amounts of money for no apparent reason with no clear goals. Microsoft may think R & D spending is the way to get ahead, but I think they've totally ignored the organisational issues involved (or worse, aren't even aware of them).

With regards to Google, I would imagine most of it is related to building tonnes of infrastructure - for reasons which aren't clear to me yet. At least they can legitimately afford it though, and it's not even a huge part of their revenue. That's what really seems to irk Microsoft about Google. They have a reliable revenue stream that isn't even related to directly to software, and isn't something Microsoft can attack like they've done with so many other companies in the past.

Re:Don't Know What They're Spending it On

[timmarhy]

nail on the head right there.

traditionally, MS has been able to crush all commers buy copying their software, intergrating it with the OS and hampering efforts of other companys from doing the same.

google makes them nash they teeth with this because web advertising it's tied to the OS at all, and will display and be clicked on in all but the most blatantly anti competitive moves. they wouldn't be game to say script IE so that you can't visit google.com.

Re:Don't Know What They're Spending it On

[owlnation]

Well, I can't fathom what Microsoft are spending $6.58 billion dollars on, especially with regard to Vista(!?)

Lobbying, marketing (including wholesale sock puppet purchases), legal fees, purchases of souls, fresh kittens for their grinders... just the usual stuff...

Re:Don't Know What They're Spending it On

[Anonymous Coward]

So, to summarize your post. Bla bla bla bla bla bla bla anti microsoft rant. Bla bla bla bla bla bla bla rationalization of why it's ok to be anti-microsoft but not anti-google even though they are probably more similar than different in many ways.

Re:Don't Know What They're Spending it On

[Anonymous Coward]

Well, I can't fathom what Microsoft are spending $6.58 billion dollars on, especially with regard to Vista(!?).

See for yourself what they're researching.

Say what you will about their business tactics, but Microsoft does do a large amount of basic research, much of which hasn't been (and won't be, for the foreseeable future) marketed as a product.

So, what is technology

[Askmum]

The list does make me wonder: what is a technology company? The biggest trigger for this wonder is the strange omission of one Xerox corp. With $922 million of R&D in 2006 it should have been ranked 13 (which seems strangly fitting considering the IP-Address space they have).

Re:So, what is technology

[thegameiam]

AT&T had $233M in R&D in 2006, according to their claim to the SEC. I noticed that no telecom companies were listed, or any serious-router manufacturers (Cisco spent $4.1B in 2006 R&D, for instance, as documented here.

Shoddy article.

Re:So, what is technology

[word munger]

Xerox is a business equipment company; Cisco is a networking and telecom device company. You have to draw the line somewhere, and this article limited it to certain categories used by Yahoo finance.

Re:So, what is technology

[Macgrrl]

Xerox do far more than copiers. The operate the PARC research faility.

From wikipedia: "PARC (Palo Alto Research Center, Inc.), formerly Xerox PARC, is a research and development company in Palo Alto, California that began as a division of Xerox Corporation. It was founded in 1970, and incorporated as a separate company (wholly owned by Xerox) in 2002. It is best known for inventing laser printing, Ethernet, the modern personal computer graphical user interface (GUI) paradigm, object-oriented programming, and ubiquitous computing. Today PARC collaborates with sponsors and clients to discover novel business concepts and transfer scientific findings into production. Current research areas include biomedical technologies, "clean technology," user interface design, sensemaking, ubiquitous computing, large area electronics, and embedded and intelligent systems."

Bill needs a new t-shirt

[supersnail]

I spent $6,000,000,000 and all I got was this loosy OS.

Re:Bill needs a new t-shirt

[supersnail]

Melissa also needs needs a new T-Shirt:--

"My husband spent $6,000,000,000 and all I got was this loosy OS"

Re:Bill needs a new t-shirt

[maxume]

Lousy. That's a wacky new misplaced double O though.

seriously It first looked like

[holywarrior21c]

'tech girl' posted the article. don't try 2 fool me, i know u r man! techegrl? ha!

--

Biz Apps?

[fruey]

"did throw significant change at biz apps like the Vista operating system"

I call BS immediately. Nothing to see here, move along.

Are patent costs being counted under "R&D"?

[Anonymous Coward]

Just checking - a trick a lot of companies do is account for patents as R&D costs. But spending on patent monopolies is NOT spending on R&D! Patents SUBSTITUTE for true R&D activity...

ON the Xbox angle...

[brunes69]

Not saying the article isn't a POS, but the remarks that they spent most on software with the biggest recipient being the Xbox is perfectly accurate.

People need to remember - while Microsoft makes the Xbox they are NOT IN the hardware business. Every aspect of the Xbox's manufacture is outsourced. and it's design is a fairly simple one compared to say the PS3. The most complex part of the Xbox is by far the video chipset which is outsourced in it's entirety.

Sure Microsoft has a lot of input no doubt into the design of things like the CPu and the vieo chopset - but they don't put up most of the R+D costs there it is the manufacturer they outsource to that does. The vast majority of Microsoft's R+D last year in the Xbox was undoubtedly for things like Xbox Live the Xbox OS, and games. Hardware would be a very small portion.

Re:ON the Xbox angle...

[djupedal]

"but they don't put up most of the R+D costs there it is the manufacturer they outsource to that does.

Are you trying to say that the vendor for the custom processor, Intel, gifted the entire R & D bill for a chip that they can't sell to anyone else? Same for Nvidia, which developed the custom graphics processor, and Flextronics, which was responsible for developing the enclosure and tooling to produce the mechanical parts (again, all unique to the XBox)...?

• Tooling costs, as one example, can stand out on a spreadsheet and are always part of the billing back to the buyer. They are carefully line-itemed, tracked and updated for the sole purpose of all non-trivial hardware related billing.
• Mock-ups and prototypes cost money, and someone has to pay for them.
• Testing and certification require donor boxes, which are all billed separately from the weekly unit runs coming off the assembly line.
• Updates to any components are billed - running changes are billed only when they are not the fault of the manufacturer or excluded as part of a contract.
• Production delays that come from the buyer which require renegotiated schedules cost money - money that the buyer has to pay if it wants production line priority over another buyer.
• Pallets of expedited units that are air shipped instead of being sent surface, at the buyers request, can incur large costs and are again, the responsibility of the buyer.
• Additional production teams and work shifts that are needed to meet an accelerated schedule stemming from a buyer request (hardware change, maybe?) are billed to...the buyer, of course.

The list goes on. Hardware may seem latent to those that primarily deal with software, but as they say, when your only tool is a hammer, all problems begin to look like nails.

There is no way Intel, Nvidia or Flextronics swallow **hardware** related R & D costs...initial or running.

bang for buck?

[rapiddescent]

The problem with these figures is that they do not represent "bang for buck" in that it is makes it fiscally advantageous to mark what some people would classify as normal run of the mill product development as "R&D".

Also, it would be far more interesting if we could determine the R&D spend that has come about from open source software (academics) or is directly spend on open source software (IBM, HP et al).

It is only a hunch, but I think the open source software has enabled, and consumed a massive part of global research and development -- but significantly, is not costed.

rd

Well they're not spending it on people

[gelfling]

At least not here in North America. So far it's been more of the same old Soviet agitprop of "Comrades! This is the Greatest Year Ever - We must continue to sacrifice for the Greater Good and compensation of our Dear Leaders !!!"

Defense Advanced Research Projects Agency

[ej0c]

DARPA spent only $3.01 billion. Less on electronics.

They're falling...

Burly Chassis

[Dogtanian]

You guys might take the piss out of Bill Gates, but MS's reputation as the #1 Big Spender gets him respect from the ladies.

The minute he walks in the joint, they can see he is a man of distinction, a *real* big spender. Some even claim that he's so good looking(!) and so refined that they'd like to let him know what's going on in their mind.

And let me tell you, these girls are fussy; they don't pop their cork for every guy they see.

Incomplete list?

[osbjmg]

I know cisco is near the $1B mark, and I'm sure there are others that I can't think of right now ;)

Re:Incomplete list?

[jasonlotus]

There are a TON of companies not on this list. No Cisco, no EMC, no Brocade, no Hitachi... (Can you tell I'm in storage?) I mean, I'm not saying all of those companies belong in the top 10 (Cisco probably does), but they probably all spent more than $23M last year. All in all, a really worthless article.

Re:Incomplete list?

[osbjmg]

Yea, not sure how they got their numbers. I can say that Huawei is rightly not in the list, they just steal R&D, must be easier. I guess it doesn't matter in China anyway.

Ratios would tell more

[Anonymous Coward]

For example:
Total spending / # of engineers or total employees (better perspective on "big spenders" relative to size of org, so top 10 might not be 10 biggest companies)
Total spending / Gross or net revenue (as others have pointed out, there may not be a direct correlation between it spending and "success")
Percentage of expenditures for internal R&D (e.g. compilers, server farms) vs. bundled/layered products and equipment as part of goods sold (indication of... well, i'm just plain curious about this one)

Kinda off-topic

[Anonymous Coward]

I was just on the canonical website when I got a server downtime message (something about being overloaded) and I figured that since tomorrow was the release of Ubuntu 7.04 that it was probably /.ed. Then I came here and I don't see a damn thing about it in the news section (Actually, I don't remember seeing anything about the wonders of open source on the main page, which is a strange phenomenon in itself). Maybe it's been Dugg? (replied to crap to get to the top)

List is very incomplete...

[Adeptus_Luminati]

Question the accuracy or completeness of this list. Cisco who spends an average of 3.2 Billion in R&D a year should have been right in the top 5. Also where are Nortel, Lucent, Juniper, and the Telcos?

source: http://www.ameinfo.com/114768.html

Adeptus

R&D Tax Write Off

[codepunk]

Now the big question is how much of this is applied for actual R&D. You see you can write off a significant amount of money by claiming it as R&D. Money is not a indicator of R&D investment, it only indicates how much was designated R&D spending to avoid paying taxes on it.

The top EIGHTY-ONE?!?!

[The_REAL_DZA]

...and no, I have not Read That Fine Article (yet), but still...

Makes me wonder where some other reports are, such as the "Top 17.4 Most Distracting Article Titles", etc.

Menus, mostly

[Radical Moderate]

There was an article here a few months ago by an ex-MS developer. He was on one of the teams(yes, plural) working on the shutdown menu. I think there were like 40 people working on it for about two years.

So yes, MS is spending plenty, but that doesn't mean they're accomplishing much.

Qualcomm not on list?

[LonelyKindGuy]

This whole list is suspect, some firms that are undoubtedly spending more on R&D are excluded, Qualcomm for instance.

Top 100?

[Kuvter]

I guess CIO Insight didn't spend enough in R&D to come up with a top 100.