Apple is increasing its research and development spending and is now at 3 percent of revenue compared with 2 percent in recent years.
The R&D spending was detailed in Apple's quarterly 10-Q filing with the Securities and Exchange Commission. As Apple's sales have ramped, the company hasn't been able to increase its R&D spending. As a result, Apple's R&D spending as a percentage of revenue was in line with what Dell and Hewlett-Packard spend.
Apple CEO Tim Cook obviously sees the discrepancy. He should, since Cook was a former IBMer. IBM keeps its R&D spending at 6 percent of sales hell or high water.
Specifically, Apple spent $1.12 billion on R&D for the three months ended March 30, up from $841 million the year before. For the six months ending March 30, Apple's R&D spending is up 33 percent from a year ago. Apple's Cook had mentioned new content and services going forward. Apple also shook up its management team last year, and Bob Mansfield was tasked with developing the company's chip and networking technologies.
Regarding R&D spending, Apple said:
R&D expense increased $278 million or 33 percent during the second quarter of 2013 compared to the second quarter of 2012 and increased $530 million or 33 percent during the first six months of 2013 compared to the same period in 2012. These increases were primarily due to an increase in headcount and related expenses to support expanded R&D activities.
The company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the company's core business strategy. As such, the company expects to make further investments in R&D to remain competitive.
As a percentage of sales, Apple's R&D spending could be higher, but it is certainly a step in the right direction.