Expenditures on Apple R & D increase, according to the "Tim Cook Doctrine"

Apple spent $ 4.2 billion on research and development in the quarter ending June, the highest quarterly amount ever invested in research and development, according to its quarterly earnings statement.

Apple's R & D bill accounted for 7.9% of its total revenue, its highest percentage since 2003, when Apple still focused on iPods and Macs. Apple is expected to spend more than $ 16 billion on research and development in 2019.

The increase in R & D spending comes as Apple's cash cow, the iPhone, has seen its sales plummet. The iPhone business turnover in the last quarter was down 12% over the same period last year. Apple invests in core technologies that can power devices that are not built, but developing and exploring open technologies has a cost.

Apple has always lagged behind other big tech companies in terms of percentage of sales, and the rest. In June, Microsoft devoted 13.4% of its revenue to research and development and Google, 15.7% of its turnover to research and development.

Analysts have noticed the increase in Apple's R & D costs. In its third quarter earnings call, an badyst asked Apple's chief financial officer, Luca Maestri, whether the company plans to continue spending more and more money, and said the trend will continue. .

"We want to improve the user experience and differentiate our products and services in the market, so we will continue to do so," said Maestri. "Certain types of investments are of course very strategic for us and they will have long-term implications."

Maestri spoke about Apple's recent $ 1 billion buyout of Intel's Modems business, which had 2,000 employees, making it the largest ever acquisition ever for customers. employees. (She spent $ 3 billion to buy Beats in 2014, but this company had fewer employees.)

"You've seen the announcement we made regarding Intel's acquisition – very important strategically for us – this requires an initial investment, of course," continued Maestri.

Apple declined to comment beyond its financial statements and Maestri's comments.

Apple CEO Tim Cook explained the purchase of Intel by a phrase called "Tim Cook Doctrine" among Apple's watchers.

Apple has "a long-term strategy of owning and controlling the basic technologies behind the products we manufacture," he said.

Primary technologies require a lot of investment.

Apple is now developing the processor in its iPhones, for example, instead of buying off-the-shelf chips from companies like Qualcomm. This requires skilled engineers and specialized equipment, often hired or purchased in competitive markets, such as Silicon Valley or Israel.

The strategy can work. Apple has also developed its own wireless Bluetooth chip, one of the key technologies behind the company's AirPods, which now form an important part of Apple's growth engine, wearable devices.

"And we have the clothing business doing extremely well, we stick to that when others may not have done it and we really put a lot of energy into it." project and in a lot of research and development and we are in a very good position today, "Cook said. says to the call.

Apple does not discuss upcoming products. But these are probably also significant expenses in technologies that could take years to market.

Apple's "Titan Project" would be working on autonomous automotive technologies and hiring executives from Tesla and other companies. Engineers and automotive facilities are not cheap.

Apple has also invested heavily in augmented reality, a technology that uses sophisticated cameras and computers to place digital objects in the real world. Apple currently offers a set of development tools to create AR applications for iPhone, but Apple has released many job offers for "technology development", suggesting greater growth potential over the market, which Cook had previously announced. "deep." According to badysts and the media, the company is currently working on a set of anti-reflective glbades for the general public.

Maestri said last week that Apple was comfortable with its operating expenses, which include sales and marketing, in addition to R & D, and compared its expenses with those of competitors.

Another comparison: Apple's R & D expenses still represent only a fraction of its share buyback expenses. Apple said it spent $ 17 billion to buy 88 million Apple stocks during the quarter, four times more than its spending on research and development.

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