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Apple increased R&D spending by more than a third in 2012

To some, the recent announcement of the new, smaller generation of iPads and lack of long-expected, much-delayed iTV announcement is a sign that Apple has stopped innovating when it comes to consumer electronic devices, and started consolidating and revisiting old successes. Can’t they come up with something new? the doubters wonder and, it turns out, they’re not entirely alone: Apple seems to be thinking the same thing, and has responded appropriately: By adding more than $1 billion to its research and development budget in 2012 alone.

That figure comes from the company’s annual Form 10-K, a financial report that the company has to provide for investors according to Securities and Exchange Commission rules; the 2012 Form 10-K reveals that Apple’s R&D spending rose to $3.4 billion this year, up from $2.4 billion in 2011. This rise comes, in part, due to increased competition in the key computer and mobile hardware spaces, as the report explains. “The Company expects competition in these markets to intensify significantly as competitors attempt to imitate some of the features of the Company’s products and applications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitive than those they currently offer,” the report notes, going on to add that “these markets are characterized by aggressive pricing practices, frequent product introductions, evolving design approaches and technologies, rapid adoption of technological and product advancements by competitors, and price sensitivity on the part of consumers and businesses.” In that kind of environment, it’s no wonder that the company wants to stay ahead of the crowd as much as possible.

It doesn’t help that Apple keeps getting involved in patent infringement lawsuits, something that the report admits are “often expensive, time-consuming [and] disruptive to the Company’s operations, and distracting to management” (Maybe Apple should start paying its R&D staff even more to decrease the likelihood of any future such lawsuits). And, yet, even with increased competition and increased likelihood of legal action, Apple had a pretty great year, if you go by what’s in the report: The company has roughly $121 billion worth of cash in its coffers, up from $81 billion at the same time last year (which was itself up from 2010’s $51 billion), thanks in large part to sales being up 45 percent on the last year, from $108 billion in 2011 to an impressive $156 billion this year.

Also up: Profits, which rose 61 percent from 2011 levels to $41.7 billion, and gross margins, which rose from 40.5 percent in 2011 to 43.9 percent. Even its number of employees rose, with the company adding almost 13,000 staff worldwide. All in all, Apple’s apparently had a pretty great 2012 – No wonder that it can afford to spend more looking for the Next Big Thing… even if it seems to be taking its time in actually finding it.


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