Apple’s R&D spending looks a lot like a car company’s

Apple has been pouring a lot more money into research and development in recent years.

In its fiscal year 2015, it spent more than $8 billion on R&D, a 34% increase from the prior year. Some have read this as a signal that a pivot is coming, specifically into the auto business. That Apple is working on car is unconfirmed, but widely reported. It’s considered an “open secret” in Silicon Valley.

What’s notable is how little Apple spends relative to other tech giants. Apple could, in dollar terms, increase its spending by 50% to join its tech peers. Amazon is branching into everything, of course, and puts content costs for its video service into this line item. Google has moonshots. In Intel’s chip industry, you spend big on R&D or you die. Apple has been methodical in its product approach. It’s worth pointing out that, Apple’s recent R&D spending does look a lot like that of a large car company, which is interesting since one is making a handful of electronics products and the other has dozens—if not hundreds—of models to consider.

Tech companies’ R&D spending is typically considered as a percentage of revenue. While that metric has increased at Apple over the past couple years, it hasn’t moved in a big way. With sales of more than $230 billion last year, Apple’s R&D spend is a drop in the bucket. If it wants to explore a series of pivots—AI, VR, whatever else it dreams up—it easily could (if it isn’t already).

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