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AH Primetime: Apple Worried About Their Innovative Dominance? Turbo-Charging Another $500 Million Into R&D

April 26, 2013 - Written By Peter Matalanis

In all seriousness, this doesn’t surprise me one bit. With Apple’s most recent profits figures starting to slump; the company has realised that they can’t keep selling the same product, call it innovative and think people will buy it. I’m definitely not insulting Apple’s marketing plan, it really worked for them over the last few years, but now that the Android market is picking itself up and focusing on usability, they need to change tactics. Starting with more R&D (research and development).

Apple’s Current Situation:

The company is still more than profitable, but if we look at some main figures their long-term prospects are far less intense as they were before (article that broke this new originally).

  • iPad sales have steady increase
  • iPhone sales increase has dropped considerably (still growing)
  • Mac sales have remained almost flat
  • Share prices have dropped to under $400

Obviously this isn’t terrible, unlike other major OEMs they’re still quite far away from losses, but Apple no longer control the market and the consumer like a virus. Tim Cook (Apple CEO) states that “The key to Apple’s strength is creating innovative products and that is always in Apple’s control”. However when your company uses technology that’s several years old, and ‘borrows’ ideas from the Android OS (notification centre, *cough*) they’re no longer innovating.

So what do Apple need to do to start innovating again? They need to put more money into research to invent new things. And that’s exactly what they’re doing.

Apple’s New Spending:

Over the last year Apple has dramatically increased their spending.

  • 33% greater for this quarter over last year
  • In January to March they spent $1.119 Billion, compared to 841 Million from last year
  • Suspected to spend more than 4 Billion in total this year if the trend continues

Apple claims that the increase in spending is for “an increase in headcount” along with expanded “R&D activities” Apple have recognised that they need to increase their “focused investments” so they can remain “competitive” in the current market against Android.

So where is the spending going to go exactly? I suspect a considerable portion would be directed to Jony Ives.  Jony took charge of a part of Apple’s software design (adding to his hardware design) once Forstall was annexed from the department. It was mostly suspected as a move to redefine Apple after Job’s era finished, perhaps Cook’s way of claiming Apple as his own. Jony redid the exterior of the i-products, making the shift from plastic coating to slim and sheek brushed aluminium. One of Apple’s problems of late is their main software (iOS) hasn’t adapted since the creation of the iPhone, it’s only gotten more clunky over time. Now that Jony has considerable influence over the software, I suspect a lot of that money will be in his department to redefine it. Make an iOS of the future. 

Apple have learned, perhaps a little later than they should have, that their level of research spending isn’t large enough. To keep themselves on the top of the smartphone world they’re going to attempt to return to the days where they made huge steps forward, where other companies stole their ideas.