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Apple Explains Why Its R&D Spending Is On the Rise (cnbc.com)

Apple has steadily increased its spending on research and development over the past few quarters. An executive with the company explained why that's the case. From a report on CNBC: Company's financial guru attributes the spending to something of a much smaller scale: chips. It may not sound like it, but that research is "very strategic and important" for Apple to differentiate itself from the rest of the industry, chief financial officer Luca Maestri said on Tuesday at the Goldman Sachs Technology and Internet Conference in San Francisco. "Today, we do much more in-house development of some fundamental technologies than we used to do a few years ago, when we did more of that in the supplier base -- the work we do around processors or sensors," Maestri said. "It's very important for us because we can push the envelope on innovation, we can better control timing, cost, quality. We look at that as a great strategic investment." On Tuesday, Maestri also noted that Apple's "product portfolio is much larger than it used to be," and that keeping all these products moving along in parallel adds up, especially with smaller markets, like the Apple Watch. While Maestri said Apple drops a "meaningful" amount of cash on products that do not generate revenue today, these products are not very large "in the total scheme of things," Maestri said. "They add up over time, and hopefully, those are good bets that we are making for the future of the company," Maestri said.

15 of 86 comments (clear)

  1. Suppliers by Anonymous Coward · · Score: 3, Interesting

    Intel has been having major issues recently. Qualcomm has apparently been a thorn in their side. Apple is no longer willing to tolerate a lot of outside suppliers being in control, so apple will bring more and more production under their own control?

  2. Kind of obvious by Guspaz · · Score: 5, Interesting

    It makes sense, Apple's in-house processors have been a major competitive advantage, particularly at a time when Qualcomm has been leveraging patents to get a near-monopoly in the SoC space. Apple's chips have been a generation ahead of the competition for some time, although their infrequent release schedule mitigates that when everybody else catches up and then passes them before the next A chip is then released.

    1. Re:Kind of obvious by Anonymous Coward · · Score: 5, Interesting

      There have been reports of full-arm laptops running a build of OSX inside apple. They're looking to go full in house for their whole line and unify the IOS/OSX platform.

      They've had tremendous success building their own ARM chips and it's one of the reasons they do so well in the smartphone market - They don't have to wait on anyone else. They get the features they want, when they want, how they want. Remember the 5s shipped with the world's first 64 bit ARM cpu. Shipped. Not teased. Not soft launched. Flagship mainline product. Millions and millions of units sold day one.

      We've already seen other reports of ARM chips with an x86-64 compatibility module the would ease the transition and allow x86-64 compiled apps to run on their new platform. By this point Apple is the expert at the "Fat Binary" transition and they can do it whenever they want. 68k>PPC>PPC64bit>x86>86x-64 and now ARM64 (IOS is in the middle of an arm32>arm64 transition as we speak)

  3. What is sad that... by Anonymous Coward · · Score: 4, Informative

    a tech company has to defend or justify spending money on R&D...for tech.

    It is as if everyone thinks that "tech" just falls out of the ether like some magic pixie dust, and a "great" tech company is really only just a better tech integrator (like Dell) than everyone else. Or should be.

    Carl Icahn I'm sure would not be amused at the frivolous and speculative spending of valuable shareholder money that should instead be used to enhance shareholder [his] value...today.

    http://www.marketwatch.com/story/carl-icahns-2-billion-apple-stake-was-a-prime-example-of-investment-inequality-2016-06-07

  4. They are trying to replace ... by CaptainDork · · Score: 2

    ... Steve Jobs.

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  5. making thinner and more apple only service takes a by Joe_Dragon · · Score: 3, Insightful

    making thinner and more apple only service takes a lot of R&D.

    now what about a real workstation? Some kind of server or at least the rights to run os x in a vm on any base hardware?

  6. Re:The real question by omnichad · · Score: 2, Insightful

    They had wireless earphones to sell. They made a market out of that piece of plastic and it ended up costing less than nothing - they made buckets of money on that.

  7. Re:making thinner and more apple only service take by WarJolt · · Score: 5, Informative

    Theres really no really research left that can make workstations better. I commend you for being so resistant to change, but Apple will lose money if they don’t stay ahead of the trend and unfortunately I don't think workstations are going to make Apple tons of money.

  8. What is the R&D Actually For? by notsteve · · Score: 3, Interesting

    To me, the salient question is whether they are investing to increase profits, or to make better products. The lack of updates in most of the mac line, along with battery and memory issues that crippled the new Macbooks, are decisions about resource allocation - Apple simply isn't interested. This is especially strange, since they still have strong development on OSX. On the mobile side, there is a lot of criticism about a lack of innovation to drive new product sales—but what I see is Apple simply looking to R&D to stabilise cost and production, based on the goal of meeting market expectations more consistently. All of this is very Tim Cook, and not very Steve Jobs. For all his faults, Steve did seem genuine about his passion to make "insanely great" products. Tim seems committed to demonstrable returns stability.

    1. Re:What is the R&D Actually For? by King_TJ · · Score: 5, Interesting

      I've made this comment before, but I think it bears repeating. I'm not really sure we can tell if Apple "just doesn't care about a lot of products in their lineup anymore" or not, until we let them get the new "spaceship" campus up and running?

      That's a huge real-estate investment that allows them to hire a whole lot of employees or contractors, especially given that Apple has said they don't plan on getting rid of any of its EXISTING office space.

      I think historically, Apple has *always* struggled with trying to do so much with so little manpower. They went head-to-head with companies the size of Microsoft, while selling a whole line of hardware along with the operating system and applications for it - when Apple employed FAR fewer people. This has resulted in the ongoing wisdom of "avoiding revision A of a new Mac" and the famed shortages of new products at launch time, among other things.

      It appears the head-count is about to dramatically increase at Apple, and I'd like to think a lot of things have gotten behind because it's slated to get addressed when new teams are hired to tackle some of it. The company certainly has the money to make those changes.

      I'm one of the people who shelled out the crazy high price for a new Mac Pro "cylinder" workstation, a month or two after it came out. I even upgraded it to 64GB of RAM via a 3rd. party memory supplier and upgraded the 256GB SSD in it to 512GB when I could source the needed part on the used market. I'm using it to type this message today and its still my "main" computer I use at home. But I only invested in this thing because I put faith in Apple to support it at least as well as they did the previous Mac Pro towers. (I owned a 2006 and a 2008 model before this one, and both were excellent workhorses that more than paid for themselves with work I got done with them.) Essentially, my loyalty was taken advantage of. Apple not only couldn't release a suitable display of their own for the machine, but never even took the obvious step of marketing an external drive storage cabinet for it. I bought a 3rd. party (DATOptic e-Box) external Thunderbolt RAID enclosure that I use with it -- but the point is, it looks like something that belongs on a Windows PC, not a Mac. It's bigger and noisier than the Mac Pro itself, and I can't put the Mac into sleep mode while it's on, or it doersn't handle it gracefully and can cause data corruption. Apple has never sold a single video card upgrade for this machine either, which is kind of ridiculous for a "Pro" desktop workstation. The dual FirePro D500's in this one perform about as well as a pair of ATI Radeon 7950 or 7970 cards, but OS X doesn't even support CrossFire mode with them. There should really be a program to take these in to have a newer, better graphics card upgrade professionally installed, since both nVidia and ATI/AMD are selling cards that are essentially 2 generations ahead of this technology now.

  9. Re: Simple Answer by UnknowingFool · · Score: 3, Informative

    Yes it's not like Apple designs their own processors for their mobile devices or anything. Oh wait, they totally do that

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  10. Re:making thinner and more apple only service take by MachineShedFred · · Score: 2

    Regardless of if you believe a EULA is enforceable or not, setting up any kind of for-profit venture that is violating the EULA of literally the richest company on the planet is a fantastic way to get bankrupted through legal action. Never mind the whole "oh, you updated your server and now it doesn't boot because you're hacking the booter to make it run somewhere it wasn't designed to" problem.

    I would much rather have Apple say that I can run macOS with the server app in a VM for added cost in their license than take the legal risks or run with zero support if a business requires it. And I say this having run many OS X servers in the past, on both Mac Pro hardware and both PowerPC and Xeon based XServe models.

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  11. Re:I haven't seen anything new in years... by MachineShedFred · · Score: 2

    You do know that the memory limit is a function of the chipset right? The chipset that Intel makes? And that is probably exactly one of the reasons for the quote in the fucking summary? That they're spending more on silicon design because their suppliers are fucking around and not delivering the stuff they need?

    TL;DR: You just fucking agreed with the article, even though you were trying to be snide.

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  12. Re: Simple Answer by larkost · · Score: 2

    "tweak" is a bit of an understatement. They are on their 5th shipping version of modified ISAs (Swift, Cyclone, Typhoon, Twister, and now Hurricane), and the included PowerVR GPU has been increasingly modified from the base technology from Imagination Technology. Where most "tweaking" is in how many cores or what fixed-function units are included, Apple has been playing with the core instruction set to make them more performant (both from power and speed perspectives). This has been how Apple has been at least a year ahead in meaningful performance for at least 4 years now (multi-thread performance is not usually meaningful on a phone), despite having a lower base clock speed than their competitors (thus getting very nice battery savings out of it).

    What this article is talking about is that Apple is spending increasing amounts of money directly in R&D, rather than farming it out to their suppliers (which does not count in R&D).

  13. Re: Simple Answer by Plumpaquatsch · · Score: 2

    They tweak the ARM design. Lots of companies tweak their own designs.

    Having a working 64 bit ARM chip 2 years before anybody else is "tweaking designs"?

    Delusional much?

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