Skip to Content

Can Apple Still Innovate on a Shoestring?

Apple is increasing its spending on R&D, but is still far short of its competitors.
November 7, 2012

In 1998, Steve Jobs told Fortune: “Innovation has nothing to do with how many R&D dollars you have.” He shut down Apple’s long-term research lab division to prove it.

Apple’s disclosure last week that it increased its annual research and development spending by nearly $1 billion, or 39 percent, could serve to break with such a philosophy.

Few large technology companies are more stingy with their R&D spending than Apple. Focused on developing and improving a handful of products, Apple lacks the sprawling basic research divisions that, for example, recently led IBM scientists to a breakthrough that could further shrink the size and cost of computer chips. While Apple’s total $3.4 billion R&D budget in 2012 is indeed growing, it’s still only a sliver of the company’s vast cash reserves. Viewed as a percentage of Apple’s sales revenues, its R&D spending remains steady over the last few years at 2 to 3 percent. These percentages put its spending far below its peers, including Microsoft, Google, and Samsung.

Still, there’s growing pressure on Apple to keep delivering radically new and exciting products. And that might be leading the company to reconsider its frugal R&D investments. In a recent SEC filing detailing its increasing R&D expenditures, Apple wrote that “focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products.”

Apple is building a dedicated R&D facility at a new Silicon Valley campus, and is hiring more R&D staff (a sampling of open positions today include: a Siri data engineer, a low-power design engineer, a camera algorithm researcher, and an iOS “conflation scientist” to work on improving Apple’s widely panned new mapping application). The company is also rumored to be building an R&D center in Israel focused on semiconductor technologies.

Apple may face new kinds of pressure to innovate now that its mobile computing platforms are well-established, says MIT Sloan School of Management professor Jason Davis. For R&D, these pressures might mean a focus on “translational research” so that Apple can quickly integrate advances from suppliers in fundamental areas such as bandwidth and networking, processing power, and screen resolution, he says. More importantly, perhaps, it means a focus on advancing software technologies, like speech processing and 3-D imaging, and finding compelling consumer uses for them, says Davis.

Keep Reading

Most Popular

Europe's AI Act concept
Europe's AI Act concept

A quick guide to the most important AI law you’ve never heard of

The European Union is planning new legislation aimed at curbing the worst harms associated with artificial intelligence.

Uber Autonomous Vehicles parked in a lot
Uber Autonomous Vehicles parked in a lot

It will soon be easy for self-driving cars to hide in plain sight. We shouldn’t let them.

If they ever hit our roads for real, other drivers need to know exactly what they are.

crypto winter concept
crypto winter concept

Crypto is weathering a bitter storm. Some still hold on for dear life.

When a cryptocurrency’s value is theoretical, what happens if people quit believing?

chasm concept
chasm concept

Artificial intelligence is creating a new colonial world order

An MIT Technology Review series investigates how AI is enriching a powerful few by dispossessing communities that have been dispossessed before.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.