[mdasen]

Apple definitely puts a lot of money into research and development to create the software and manufacturing techniques. This estimate is more about marginal profit. To make it a bit clearer, if Apple sold zero iPhones, the R&D costs you talk about would still be incurred (and in the same amount). If Apple sells a billion iPhones, the R&D costs you talk about would be the same amount.

One could imagine a company that does $1M in R&D, has a price per unit of $650, and a cost per unit of $500. Similarly, a company could do $100M in R&D, have a price of $650, and a cost per unit of $200. At some number of units (and I'm just being lazy here since I don't want to do the math), the second company makes more money.

A statement like this isn't meant to sound like Apple isn't offering customers a good value, but rather that the cost to supply 1 additional iPhone is small compared to the revenue gained by selling 1 additional iPhone - basically, that a lot of Apple's costs are R&D, not component costs. When evaluating a company for investment, it's nice to see that they aren't running thin margins on supplying marginal units and so the more they succeed, the more the R&D costs are spread out.

[JimmaDaRustla]

Apple definitely does not put lots of money into R&D.

http://blogs.wsj.com/tech-europe/2012/05/14/nokia-outspent-a...

Not that it is a BAD thing, or a good thing - the innovations from R&D past pays off years after, but they only spent 2.4 billion. They tried sueing Samsung for more than their total annual R&D costs.

Again, not science here, just an oberservation that they are indeed cheap with R&D.

[Camillo]

I think it's more a case of Nokia wasting money than Apple being cheap. I lost count of all the phone OSs Nokia was developing: Maego, Meemo, multiple versions of Symbian... and in the end they had to throw everything away and license Microsoft's OS to get something competitive. That's hardly a model of good R&D spending.

[JimmaDaRustla]

Agreed to this and all other comments. There can be no criticism of how much a company spends on R&D - spend tens of billions make a profit, you're doing good, but spend a couple billion and make billions in profit, your a genius. Apple is indeed getting the better bang for their buck over their competitors, that's for sure.

Overall, I think R&D costs is really a moot point, although its always nice to see corporations going above and beyond to push the boundaries of technologies, and develop new ones.

[twoodfin]

A lot of that distinction is just accounting. Apple under Jobs believed that the best "R&D" was done by the folks working on real, shipping products. I bet Ive's salary isn't counted as R&D, but surely that's a big part of his job.

[huxley]

Cheap relative to their revenue, $2.4 billion is still a LOT of money.

Bell Labs in 1982 had an annual budget of $1.6 billion which in 2012 dollars comes to about $3.6 billion.

I believe Xerox PARC had a relatively petite budget of $17 million or so in 1979, so incoming dollars are probably a very imprecise measure of R&D quality.

[jlmendezbonini]

The article is not clear as to whether the mentioned spending is only Nokia's handset department. Assuming that's not the case then I don't think it's a fair comparison because Nokia's product portfolio is way bigger than handsets. It's just like comparing Intel's and Apple's R&D spending.