For a company its size, Apple invests relatively little on research and development. A European Union list of the 50 biggest R&D spenders in 2013 had VW, Samsung, Microsoft and Intel at the top and Apple near the bottom in 46th place.
But Apple gets a lot of bang for its research bucks; in the years covered by the attached chart it released the iPhone, the iPad, the new Mac Pro and a lot of software and services.
So when it increases R&D spending 36% year over year — as it did in the June quarter — Wall Street takes notice.
BTIG’s Walter Piecyk pointed out Tuesday that Apple’s R&D spending as a percent of revenue topped 4% in fiscal Q3, a level not reached since 2006, just before the launch of the original iPhone.
Morgan Stanley’s Katy Huberty goes further. In a note to clients Friday, she points out that Apple’s commitments for third-party manufacturing and component purchases rose 22% in Q3 to $15.4 billion while its commitments for product tooling and manufacturing process equipment, advertising, research and development, and Internet and telecommunications services grew 100% from the previous quarter to $5.6 billion.
Huberty is particularly interested in that last category — retail. She takes as a given that Apple will release a device in October that she calls the iWatch, but she’s talking about something that sounds less like a timepiece than a credit card. She ends her note like this: