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Apple Explains Why Its R&D Spending Is On the Rise (cnbc.com) 86

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.
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Apple Explains Why Its R&D Spending Is On the Rise

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  • Suppliers (Score:3, Interesting)

    by Anonymous Coward on Wednesday February 15, 2017 @02:05PM (#53874607)

    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?

  • Kind of obvious (Score:5, Interesting)

    by Guspaz ( 556486 ) on Wednesday February 15, 2017 @02:06PM (#53874619)

    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.

    • Re:Kind of obvious (Score:5, Interesting)

      by Anonymous Coward on Wednesday February 15, 2017 @02:44PM (#53874939)

      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)

      • 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

        Having gone through two of those, they both sucked, although the 68k to PPC sucked less than the PPC to x86. That one sucked hard because they didn't maintain backwards compatibility long at all.

        If I have to do another transition, it's going to be a transition back to Linux.

      • by AmiMoJo ( 196126 )

        We have had ARM Chromebooks for years. Apple's main issue is that they need more cores to get good performance on desktop. 2 isn't really going to cut it, especially if they are trying to do binary translation on the fly.

    • by AmiMoJo ( 196126 )

      Apple's ARM chips have been sub par since the very start. Like Intel in the Pentium 4 days, they concentrate on winning certain benchmarks rather than overall good performance. Low core count, unimpressive power management capabilities that rely on tight integration (and thus limiting of) the OS... Single core performance is good, but that's about it.

      They have a few tricks, like integrating sensor peripherals, but not to any greater extent than say Samsung SoCs. The poor power consumption numbers have hobbl

      • Apple's ARM chips have been sub par since the very start.

        You keep using that word. I do not think it means what you think it means.

  • How many millions did it take to replace the headphone jack with a useless piece of plastic?

    /snark
    • Re: (Score:3, Insightful)

      by omnichad ( 1198475 )

      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.

  • What is sad that... (Score:4, Informative)

    by Anonymous Coward on Wednesday February 15, 2017 @02:21PM (#53874755)

    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

    • by mjwx ( 966435 )

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

      I've spotted your problem.

      It certainly is news when a marketing company spends money on R&D. Especailly when spending increases.

      What Apple have said here is that their marketing is no longer enough to win customers, they actually need to compete with other technology products. I predicted this 2 years ago as China was the last significant market left to move into, once that was done their userbase would start dropping because people are already falling off the Apple bandwagon in western countries.

  • by CaptainDork ( 3678879 ) on Wednesday February 15, 2017 @02:22PM (#53874761)

    ... Steve Jobs.

    • You are profoundly confused about the difference between a vision and R&D. Coming up w/ the idea of the iPhone was the easy part. You don't hear about the thousands of people that toiled for years to make it into a polished product.

      Jobs was a visionary. He didn't do R&D.

      • You don't hear about the thousands of people that toiled for years to make it into a polished product.

        If you watched many Steve Jobs keynotes, then you did. He even brought some of them on stage from time to time.

      • I read the fucking book.

        Go look at why Apple brought him back and the in-fighting over cheap vs polished.

        Also, look at sales trends vs the presence of Jobs vs his passing.

        Apple is trying to buy a Steve Jobs.

        • Ok, you are right. Jobs, alone, did most (all?) of Apple's R&D. Hope you enjoyed the (fucking) book.

          Also, look at sales trends vs the presence of Jobs vs his passing.

          I know right? Apple is really in the toilet right now.

  • by notsteve ( 650350 ) on Wednesday February 15, 2017 @02:43PM (#53874931)
    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.
    • 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.

      No matter who is in charge, they are beholden to Wall Street Greed above all.

      In case you needed any clarity regarding your salient question.

    • by King_TJ ( 85913 ) on Wednesday February 15, 2017 @04:17PM (#53875643) Journal

      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.

      • That's possible, but consider the counter-argument: somehow they still built their light-bar onto the mac. The frequency of updates doesn't bother me as much as the lack of quality in the updates when they do come. It's really sad because I feel that the world is better off with a company like Apple in it, making good products.
        • Yeah - I kinda feel like that bar is yet another thing that everyone says is useless - and then five years later, everyone said Apple didn't innovate it because obviously it's a good idea. But because of clumsy engineering on the battery, they had to use low power ram in those computers that didn't support 32GB. I think we're all saying the same thing - though I'd add that their lack of support for their workstation-class machine is borderline criminal.
      • not to mention being stuck with Thunderbolt 2
    • by larkost ( 79011 )

      The memory limitations that you cite, as well as the driving problem behind slow updates, can be squarely put at the feet of Intel. They have pushed back meaningful updates for a couple of years now. I am not implying that they are doing so deliberately, but rather have been unable to make meaningful upgrades.

      To take the memory size limitation, that is because Kaby Lake processors are the only ones to support 64GiB, and the models that Apple would have used were not available (let alone in Apple quantities)

  • by Anonymous Coward

    It's a pathetic day and age when R&D has to be explained.

    CEO bonuses and compensation? Nope.

    Massive goodwill charges for buying some waaayyyy overpriced Silly Valley startup or some other takeover? Nope.

    CEO's ridiculous retirement package? Nope (See GE)

    Paying a CEO an obscene amount to fuck up the company (Yahoo! & HP) Nope.

    Now if any of you would like a pay raise to at least be competitive with your peers at another company, well YOU have to justify it and sorry, it's not in the budget.

  • 'Uh, hey guys? Remember when we were a tech company, and not a branded-lifestyle accessory designer? We might want to go back to doing that thing again, since our pipeline is shit.'
    • Re: Simple Answer (Score:4, Informative)

      by UnknowingFool ( 672806 ) on Wednesday February 15, 2017 @03:12PM (#53875193)
      Yes it's not like Apple designs their own processors for their mobile devices or anything. Oh wait, they totally do that
      • They tweak the ARM design. Lots of companies tweak their own designs.

        • by larkost ( 79011 )

          "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 le

        • They tweak the ARM design.

          If by tweak, they design their own cores rather use the stock ARM cores, yes.

          Lots of companies tweak their own designs.

        • 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?

      • No they don't. They take an existing design supplied by ARM and make some modifications to it, they do not design their own.
        • No they don't. They take an existing design supplied by ARM and make some modifications to it, they do not design their own.

          Well that's not factually true. An Apple Ax processor is not an existing design [anandtech.com] by ARM; they are wholy designed Apple chips.

          NVIDIA and Samsung, up to this point, have gone the processor license route. They take ARM designed cores (e.g. Cortex A9, Cortex A15, Cortex A7) and integrate them into custom SoCs. . .With the A6 SoC however, Apple joined the ranks of Qualcomm with leveraging an ARM architecture license. At the heart of the A6 were a pair of Apple designed CPU cores that implemented the ARMv7-A ISA. I came to know these cores by their leaked codename: Swift.

          You're just dead wrong.

          • You know Apple spun off Arm after designing the architecture for the Newton MessagePad, right?
    • by Anonymous Coward

      But they make some damn fine dongles.

  • ...if you can only release a new "version" of i* devices every year, there isn't enough money coming in anymore. Solution, release the iPhone 8 in December, and the iPhone 9 in February, followed by the iPhone 10 in March to fix all of the annoying but awesome bugs and glitches in version 9.

    Wait a minute...

According to the latest official figures, 43% of all statistics are totally worthless.

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