Apple's Incredible Efficiency

  • May 24, 2010
  • Scott
  • 6 Comments

This post on the Silicon Alley Insider really impressed me:

Turns out, Apple’s run of incredible products (and growth) has been achieved with a staggeringly low R&D spend. How low? Apple only spent $4.6 billion on R&D over the past four years, while revenues soared from $25 billion to $43 billion.

In contrast, Microsoft spent 700% that amount on R&D during the same period, a whopping $31 billion, while growing at an anemic pace, despite flippant M&A. Likewise Cisco and Intel spent about 400% as much as Apple on R&D – $19 billion and  $23 billion respectively. These are astounding differences above Apple’s research and development spend, especially considering that during this period Apple developed the iPhone and iPad.

In fact it’s rumored that Apple brought the iPhone to market for a mere $150 million, doing so organically without acquisition outside of a touch gesture recognition company named FingerWorks.

That’s pretty incredible.  And it points back to something we’ve posted previously, that while Apple’s design process may look expensive, it is actually more efficient than the alternatives.  Anyone who has spent time in the software business (as I have) knows that a badly designed software feature costs a lot more *after* sale than it does to build.  And well-designed software, which may not only cost next-to-nothing to support, but also may increase sales by creating positive impressions and network effects, doesn’t cost that much more to build.

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