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Amazon Spent Close To $23B on R&D in 2017, Outpacing Fellow Tech Giants (geekwire.com)

Posted by msmash on from the gotta-invest dept.

Amazon powered its prolific 2017, which saw the release of a cavalcade of new products and services, with $22.6 billion in spending on research and development, tops among U.S. companies. From a report: According to data from FactSet, Google parent Alphabet came in second in R&D spending in 2017 at $16.6 billion, followed by Intel at $13.1 billion, Microsoft at $12.3 billion and Apple at $11.6 billion. Facebook jumped into the top 10, spending $7.8 billion in 2017. One of Amazon's biggest R&D efforts in recent years has been the cashier-less grocery store concept Amazon Go. The company spent 2017 getting the technology, first announced in December 2016, ready for prime time before opening the first location in January. Amazon has invested heavily in its market-leading cloud computing arm, Amazon Web Services. AWS juiced Amazon.

62 comments

  1. And yet... by jrnvk · · Score: 2

    ... Google Assistant is still much, much better than Alexa, if you ask me.

    1. Re:And yet... by Anonymous Coward · · Score: 0

      Yet Echo devices outsell Google by 2-to-1.

    2. Re: And yet... by Anonymous Coward · · Score: 0

      You mean standalone devices? Not including phones, right?

    3. Re: And yet... by SuperKendall · · Score: 1

      And YOU are factoring in the people who have Android phones but never use the assistant, right???

      --
      "There is more worth loving than we have strength to love." - Brian Jay Stanley
    4. Re: And yet... by Anonymous Coward · · Score: 0

      Yes, and please pretend it is trumps asshole.

  2. Amazon isn't a monopolist by FeelGood314 · · Score: 3, Insightful

    They have some very impressive logistics and brand recognition but almost no barriers to others competing against them. AWS is amazing but there is very little that binds you to using them. aliexpress provides strong competition in their merchandise sales and shopify is changing the way online companies sell, threatening both of them. Amazon earns it sales every quarter and lots of people want those sales. I can see the justification for the high R&D budget.

  3. Wow, the USAF only spends $4B by Anonymous Coward · · Score: 2, Informative

    Interesting that the USAF only spends $4B on R&D within its own laboratory (actually $3B of that might be outsourced.) Maybe all those academics ought to be going for Amazon or Microsoft grants instead of USAF grants.

    1. Re:Wow, the USAF only spends $4B by Anonymous Coward · · Score: 1

      Are you saying that Amazon should take over the F-35? It would make a helluva delivery vehicle.

    2. Re:Wow, the USAF only spends $4B by DontBeAMoran · · Score: 1

      [_] Add F-35 delivery in 240 seconds or less*.

      * extra delivery fee of fifty thousand dollars.

      --
      #DeleteFacebook
    3. Re:Wow, the USAF only spends $4B by Anonymous Coward · · Score: 0

      Get Prime for free delivery.

    4. Re: Wow, the USAF only spends $4B by Brockmire · · Score: 1

      That's the Military Prime service.

  4. Juiced by xxxJonBoyxxx · · Score: 2

    >> AWS juiced Amazon.

    AWS squeezed Amazon to release goodness in liquid form and left behind a husk? Odd that "juiced" has come to mean what it has...

    1. Re:Juiced by Anonymous Coward · · Score: 0

      Anyone who uses slang in a professional setting is garbage.

      Nat Levy, you are a fucking hack.

      That's right, I am throwing shade.

    2. Re:Juiced by Anonymous Coward · · Score: 0

      Cool story, Aspergers Man.

    3. Re:Juiced by brianerst · · Score: 2

      Why the quote ended there is a mystery only msmash can know.

      AWS juiced Amazon’s bottom line in 2017, bringing in $17.4 billion in revenue for the year, a 43 percent jump over its total in 2017.

    4. Re:Juiced by jeff4747 · · Score: 1

      It turns out, words sometimes have more than one meaning.

      juice
      joos/Submit
      verb
      past tense: juiced; past participle: juiced; adjective: juiced
      1.
      extract the juice from (fruit or vegetables).
      "juice one orange at a time"
      2.
      NORTH AMERICANinformal
      liven something up.
      "they juiced it up with some love interest"

    5. Re:Juiced by sexconker · · Score: 1

      That's not throwing shade. That's just insulting someone. Throwing shade is much more delicate endeavor.

    6. Re: Juiced by Type44Q · · Score: 2

      Except he's right: there are lots of mouthbreathers in the corporate world who lack proper vocabularies and have to resort to slang.

    7. Re: Juiced by Brockmire · · Score: 1

      They can't even copy and paste properly. Or, they have a minimum level of fuckups per submission they need to reach.

    8. Re: Juiced by HornWumpus · · Score: 1

      No matter who owns this place, some things never change.

      It's a type of Toxoplasmosis, only affects /. editors. They pass it amongst themselves during initiation, involves a furry suit that is never washed and the femur bone of Cowboy Neil.

      Or so I am told.

      --
      John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  5. How do you spend $23 Billion? by DalM · · Score: 2

    I am incapable of comprehending this number. I really can't comprehend how they could spend that. Imagine, for a minute, $23 Billion would employ 115,000 people at an average salary and overhead of $200,000. Where the heck are these people? Seattle, I guess. What are they all doing? How many projects are there?

    1. Re:How do you spend $23 Billion? by Lunix+Nutcase · · Score: 1

      R&D costs are more than just salaries.

    2. Re:How do you spend $23 Billion? by Rockoon · · Score: 0

      Consider that Amazon/Bezos/WaPo has a big-money deal with the CIA also. Dont suppose anyone thinks its for hosting CIA servers.

      --
      "His name was James Damore."
    3. Re:How do you spend $23 Billion? by DontBeAMoran · · Score: 2

      But salaries are usually the most expensive part of most projects.

      --
      #DeleteFacebook
    4. Re:How do you spend $23 Billion? by HarrySquatter · · Score: 2

      Except for the fact that the Washington Post is not part of Amazon?

    5. Re: How do you spend $23 Billion? by Anonymous Coward · · Score: 0

      But salaries are usually the most expensive part of most projects.

      Haha, ha ha ha, hahaha!

      Oh lord! Please stop, you're too funny.

    6. Re:How do you spend $23 Billion? by jeff4747 · · Score: 1

      "Development" can include the costs of making the next version of an existing product. As in, they can consider the costs of adding features to Amazon's store front as "development".

      Over-simplifying, you get to call everything in software "development" as long as it is not bug fixes or custom work.

    7. Re:How do you spend $23 Billion? by LostMonk · · Score: 2

      Part of the reason for that huge number is that Amazon is willing to pay outrageous sums for top talent ... offering double pay and more for highly skilled people to cross over.

    8. Re:How do you spend $23 Billion? by poached · · Score: 2

      I think a lot of it salary. Engineers, QA, etc, all get categorized as R&D at my company for tax credit purposes.

      The equipment they need is also a part of it I think.

    9. Re:How do you spend $23 Billion? by Rockoon · · Score: 0

      All streams lead to Bezos

      --
      "His name was James Damore."
    10. Re: How do you spend $23 Billion? by Type44Q · · Score: 1

      I am incapable of comprehending this number.

      Government education's a bitch.

    11. Re:How do you spend $23 Billion? by lgw · · Score: 1

      I am incapable of comprehending this number. I really can't comprehend how they could spend that. Imagine, for a minute, $23 Billion would employ 115,000 people at an average salary and overhead of $200,000. Where the heck are these people? Seattle, I guess. What are they all doing? How many projects are there?

      Last I checked, Amazon had ~500k full-time employees. I imagine a lot of those are "R&D": could easily be 115k. For sure they can't hire fast enough in Seattle, which is why they're doing to whole "HQ2" thing.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    12. Re:How do you spend $23 Billion? by HornWumpus · · Score: 1

      I've seen 'them' capitalize the full cost of an IT effort, 5+ years long, called everything 'R&D'. Anybody who understands the full life cycle knows the ratio of development to support costs, even fairly early in an effort. Decent auditors should look at that ratio, but that doesn't get them hired.

      If that's going on, it a straight up accounting trick at best. They are looking to be acquired, making their books look good by hiding operations costs in capital accounts.

      --
      John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
    13. Re:How do you spend $23 Billion? by jezwel · · Score: 1

      R&D typically attracts tax subsidies or offsets greater than the pure expense of the R&D. Then what you need to do is work out how to classify large chunks of your work as R&D. For a software company everything to do with development of new(er) software (salaries, buildings, hardware, etc) could be classified in this. All the work on new hardware products is R&D. Everyone working on those new products = R&D. All the facilities used ? R&D.

    14. Re:How do you spend $23 Billion? by LynnwoodRooster · · Score: 1

      A high-volume product like the Kindle Fire may have an EVT run of 2500 pieces, and upwards of 5000 pieces for a PVT run. You may build - and toss - around 30K pieces during development, and they will be done at costs typically 3-5X typical manufacturing costs. Meaning you may spend around $5MM or more just on sample items, and another $4MM+ on tooling. This could easily equal the costs of engineering for a given product.

      --
      Browsing at +1 - no ACs, I ignore their posts. So refreshing!
    15. Re:How do you spend $23 Billion? by Anonymous Coward · · Score: 0

      It depends on the sector, there wouldn't be such high costs for software development but could easily surpass salaries for hardware development.

  6. Research vs Development Spending by QuietLagoon · · Score: 4, Interesting

    I'd really like to see the spending for Research and the spending for Development reported separately. While both are a form of investment in the future, they have differing reasons for the expenditures. For example, it looks as if Amazon's R&D spending was mostly development, with very little research.

    1. Re: Research vs Development Spending by Anonymous Coward · · Score: 0

      I'd really like to see the spending for Research and the spending for Development reported separately. While both are a form of investment in the future, they have differing reasons for the expenditures. For example, it looks as if Amazon's R&D spending was mostly development, with very little research.

      Whatever distinction you are trying to make is entirely in your own head.

      R&D is product development, how much is 'new' doesn't matter one bit.

    2. Re:Research vs Development Spending by Anonymous Coward · · Score: 0

      Have you heard of Lab 126?

      There's over a thousand people there working on Amazon's hardware products.

    3. Re: Research vs Development Spending by QuietLagoon · · Score: 1

      Whatever distinction you are trying to make is entirely in your own head. R&D is product development, how much is 'new' doesn't matter one bit.

      It is funny how you lash out at me for your own inability to comprehend something beyond your capability of understanding. :)

  7. Automation work by rsilvergun · · Score: 2

    lots and lots of it. Amazon is on the forefront of retail automation. Store fronts, warehouses, delivery. You name it. They're being allowed to bleed cash because $23 billion is peanuts compared to a retail future without retail employees...

    --
    Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
    1. Re:Automation work by DontBeAMoran · · Score: 1

      And when everyone is out of work, who will buy all those good and services?

      For example, a billionaire buys the same amount of toilet paper as a poor person.

      --
      #DeleteFacebook
    2. Re:Automation work by Huge_UID · · Score: 2

      Less. They have $3,000 bidets.

    3. Re:Automation work by lgw · · Score: 1

      There will always be new jobs. But Amazons workforce (both professional and blue collar) still grows every year, despite whatever automation they have. Interesting times.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    4. Re:Automation work by Anonymous Coward · · Score: 0

      Poor people steal it from work, and the poorer steal it from McDonalds.

  8. But is This All Truly Research and Development? by PastTense · · Score: 2

    Wall Street has the view that losing money is a bad thing while research and development is a good thing. Thus Amazon has a strong incentive to push expenditures which you or I would not consider research or development into that category.

  9. Re: I’m gay and want my ass fucked til I sq by Anonymous Coward · · Score: 0

    Why is this modded down? No one else does this?

  10. I call for an audit by Anonymous Coward · · Score: 0

    I would like to know if they are actually spending all that on actual R&D or if it is just another one of their tax avoidance schemes to claim marketing expenses as tax credits.

  11. Anything but pay Taxes by Anonymous Coward · · Score: 0

    Yeah Jeff, nice wheeze, just cant bring yourself to contribute actual $ back to the societies that let you exist egh?, lets hope those communities you leech off don't revolt, remember you are still a mortal.

  12. dividends? by OrangeTide · · Score: 1

    I think I'd rather have dividends on AMZN stock. A 0.1% return would cost I think around $1B.

    Other tech companies pay more like 0.05%, and even that can be a nice windfall if you have a significant number of shares.

    --
    “Common sense is not so common.” — Voltaire
    1. Re:dividends? by Anonymous Coward · · Score: 0

      .05% return is fucking nothing, are you serious? If you own 2 million dollars of AMZN, you get back $1,000. Big deal.

    2. Re:dividends? by Anonymous Coward · · Score: 0

      I think I'd rather have dividends on AMZN stock. A 0.1% return would cost I think around $1B.

      Other tech companies pay more like 0.05%, and even that can be a nice windfall if you have a significant number of shares.

      One important fact left out - Amazon currently does not pay out dividends to its stockholders. Microsoft employed a similar strategy in the 1990s and didn't issue a dividend until early 2000's ... and we all know what happened from there. IBM consistently issues stock buyback and dividends (around 4%) instead of reinvesting in its R&D ... we all know where IBM is these days as a result. Could enlist countless other examples - you get the idea.

      My main point - I am complimenting this fact - not complaining about it. I fear the day Amazon does start paying dividends and does not reinvest its profits in awesome new stuff.

    3. Re:dividends? by OrangeTide · · Score: 1

      One important fact left out - Amazon currently does not pay out dividends to its stockholders.

      Which is why I'd like them to pay them out.

      If you're looking for a counter example, NVDA does pay dividends and they are frequently the technology leader in their market.

      --
      “Common sense is not so common.” — Voltaire
    4. Re:dividends? by OrangeTide · · Score: 1

      I wouldn't mind $1000. But I also wouldn't mind stabilized stock prices, which is what dividend paying stocks tend to do.

      I'm investing for the long term, not for a get-rich-quick yo-yo economy.

      Obviously I'd prefer 1% dividends semi-annually plus 5% growth per year on all my shares. But I won't hold my breath for that kind of payout. (or denigrate anything less as being "fucking nothing")

      --
      “Common sense is not so common.” — Voltaire
  13. Raw R&D spending isn't a good measure by Solandri · · Score: 2

    You have to divide it by how much revenue the company takes in. Otherwise a small company which spends a large percentage of its income on R&D (e.g. Celgene) can be eclipsed by a huge company which spends a pithy percentage on R&D (e.g. Apple). Pulling numbers from TFA and wikipedia, the top 16 in R&D spending sorted by percentage are:

    1. Celgene - $5.9b R&D spending on $12.973b in revenue, or 45.5%
    2. Qualcomm - $5.5b on $22.291b, or 24.7%
    3. Merck - $9.6b on $40.122b, or 23.9%
    4. Intel - $13.1b on $62.76b, or 20.8%
    5. Facebook - $7.8b on $40.653b, or 19.2%
    6. Amazon - $22.6b on $117.86b, or 19.2%
    7. Oracle - $6.2b on $37.73b, or 16.4%
    8. Alphabet - $16.6b on $110.85b, or 15.0%
    9. Pfizer - $7.6b on $52.546b, or 14.5%
    10. Microsoft - $12.3b on $89.95b, or 13.7%
    11. Johnson & Johnson - $10.4b on $76.45b, or 13.6%
    12. Cisco - $6.1b on $48.005b, or 12.7%
    13. IBM - $5.4b on $79.193b, or 6.8%
    14. Ford - $8.0b on $156.776b, or 5.1%
    15. Apple - $11.6b on $229.234b, or 5.1%
    16. GM - $7.3b on $148.588b, or 4.9%

    The list is also limited to U.S. companies. Generally biotech and pharmaceutical companies top the list, followed by semiconductor companies, then tech companies.

    1. Re:Raw R&D spending isn't a good measure by angel'o'sphere · · Score: 1

      I guess then software development is not considered 'the D' in R&D?
      Otherwise the low percentage of R&D spendings for Apple are not plausible at all. The only thing they do is developing hard and software ...

      --
      Cost free eBook I read (by iBook/Kobo/Amazon/ObookO/Gutenberg etc.): "The Green Odyssey" by Philip Jose Farmer.
  14. Amazon has the best by Brockmire · · Score: 1

    Accountants

  15. Corrected it for you. by 140Mandak262Jamuna · · Score: 1

    Amazon spent 22.6 billion dollars and called it research.

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact