Apple Is Ramping Up R&D to Find Its Next Big Product - PCMag UK " /> Skip to main content PCMag UK By Rob Marvin 2 Aug 2019, 11 a.m. Amid stagnant growth and declining profits, Apple is pouring money into research and development as its services revenue continues to make up a bigger chunk of the pie. We review products independently, but we may earn affiliate commissions from buying links on this page. Terms of use. Apple's Q3 earnings came with good news and bad news. The tech giant's services segment continues to grow steadily and helped buoy Apple's overall revenue growth, but profits dipped more than 12 percent amid declining iPhone sales. Though Apple's services, wearables, and accessories products are still showing healthy growth, the iPhone has been its cash cow for a decade. As the smartphone market stalls and iPhone sales stagnate, Apple needs a breakthrough technological innovation the likes of which we haven't seen much of during the Tim Cook era. And the company knows it. So it's not surprising that Apple spent a higher percentage of its total sales revenue in Q3 on research and development than it had in any quarter since before the launch of the iPhone. The company spent $4.26 billion on R&D in Q3, or 7.9 percent of its total sales. Overall, Apple has allotted 6.2 percent of its 2019 sales revenue to R&D, its highest percentage since 2003. Over the past decade, Apple's yearly R&D spending has risen from $1 billion in 2009 to a projection of more than $13 million in 2019. As for where all that money is going, the company has invested in AI, autonomous cars, augmented reality, biometrics, and plenty more we may never know about unless a product is unveiled. In the meantime, Apple is quadrupling down on its services business. The growing revenue umbrella includes iCloud and Apple Music subscriptions, App Store and iTunes sales and commissions, Apple Pay fees, and newly announced services such as Apple News+ and Apple TV Channels. In Q3, Apple's services revenue accounted for 21 percent of total sales, reaching a new high of $11.5 billion, up only incrementally from last quarter but 12 percent year over year. This quarter is also the first time iPhone sales dipped below 50 percent of Apple's total revenue. There's a reason Apple and other tech powerhouses are bolstering their cloud-based services portfolios. The profit margins are extremely high, and services carry recurring monthly subscription costs, providing consistent, growing revenue—as opposed to a consumer buying a device every few years. Apple's services revenue will only grow in the next year or more as its biggest bets enter the market. The Apple Card launches this month, the company's Apple TV+ streaming service will debut sometime this fall for an unspecified cost, and Apple Arcade is Cupertino's horse in the 5G-enabled cloud gaming industry, competing against Google Stadia, Microsoft xCloud, and others. Who knows whether Apple will surprise us again with a game-changing tech product on the scale of the iPhone? But while the company continues to pour more money into R&D, its services business is slowly turning Apple into not just a device- and software-maker but also a media and entertainment giant, a financial services provider, a gaming platform, and beyond. HTML MODULE 4329 Next Article More Inside PCMag.com About the Author Rob Marvin is the Assistant Editor of PCMag's Business section. He covers startups, business and venture capital, and writes features, news, and trend stories on all manner of emerging technologies. Beats include: blockchain, artificial intelligence and cognitive computing, augmented reality, legal cannabis tech, social media, the mobile app economy, digital commerce and payments, cloud, Big Data, low code development, containers and microservices, deep linking, equity crowdfunding, M&A, SEO, and enterprise software in general. Rob was previously an editor at SD Times covering software, managing social media, and writing narrative-driven features on any offbeat story or trend he could find. He graduated from Syracuse University's S.I. Newhouse School of Public Communications ... See Full Bio Please enable JavaScript to view the comments. Ad So it's not surprising that Apple spent a higher percentage of its total sales revenue in Q3 on research and development than it had in any quarter since before the launch of the iPhone. The company spent $4.26 billion on R&D in Q3, or 7.9 percent of its total sales. Overall, Apple has allotted 6.2 percent of its 2019 sales revenue to R&D, its highest percentage since 2003.\nOver the past decade, Apple's yearly R&D spending has risen from $1 billion in 2009 to a projection of more than $13 million in 2019. As for where all that money is going, the company has invested in AI, autonomous cars, augmented reality, biometrics, and plenty more we may never know about unless a product is unveiled.\n\nIn the meantime, Apple is quadrupling down on its services business. The growing revenue umbrella includes iCloud and Apple Music subscriptions, App Store and iTunes sales and commissions, Apple Pay fees, and newly announced services such as Apple News+ and Apple TV Channels.\nIn Q3, Apple's services revenue accounted for 21 percent of total sales, reaching a new high of $11.5 billion, up only incrementally from last quarter but 12 percent year over year. This quarter is also the first time iPhone sales dipped below 50 percent of Apple's total revenue.\nThere's a reason Apple and other tech powerhouses are bolstering their cloud-based services portfolios. The profit margins are extremely high, and services carry recurring monthly subscription costs, providing consistent, growing revenue\u2014as opposed to a consumer buying a device every few years.\n\nApple's services revenue will only grow in the next year or more as its biggest bets enter the market. The Apple Card launches this month, the company's Apple TV+ streaming service will debut sometime this fall for an unspecified cost, and Apple Arcade is Cupertino's horse in the 5G-enabled cloud gaming industry, competing against Google Stadia, Microsoft xCloud, and others.\nWho knows whether Apple will surprise us again with a game-changing tech product on the scale of the iPhone? But while the company continues to pour more money into R&D, its services business is slowly turning Apple into not just a device- and software-maker but also a media and entertainment giant, a financial services provider, a gaming platform, and beyond.\n HTML MODULE 4329 ", "image": [{"url": "https://sm.pcmag.com/pcmag_uk/news/a/apple-is-r/apple-is-ramping-up-rd-to-find-its-next-big-product_dhda.jpg", "width": 1920, "caption": "Apple Is Ramping Up R&D to Find Its Next Big Product", "@type": "ImageObject", "height": 1080}], "datePublished": "2019-08-02 10:00:00+00:00", "publisher": {"url": "https://uk.pcmag.com", "logo": {"url": "('https://uk.pcmag.com/s/',)pcmag/pcmag_logo_micro.png", "width": 245, "@type": "ImageObject", "height": 60}, "@type": "Organization", "name": "PCMag UK"}, "about": "", "author": {"jobTitle": "Assistant Editor, Business", "description": "Rob Marvin is the Assistant Editor of PCMag's Business section. He covers startups, business and venture capital, and writes features, news, and trend stories on all manner of emerging technologies. Beats include: blockchain, artificial intelligence and cognitive computing, augmented reality, legal cannabis tech, social media, the mobile app economy, digital commerce and payments, cloud, Big Data, low code development, containers and microservices, deep linking, equity crowdfunding, M&A, SEO, and enterprise software in general.\n\nRob was previously an editor at SD Times covering software, managing social media, and writing narrative-driven features on any offbeat story or trend he could find. He graduated from Syracuse University's S.I. Newhouse School of Public Communications in 2013 with degrees in Magazine Journalism and Psychology. You can also find his business and tech coverage on Entrepreneur and Fox Business. \n\nRob is also an unabashed nerd who does occasional entertainment writing for Geek.com on movies, TV, and culture. He reads epic fantasy and historical fiction, and enjoys having his heart routinely broken by the Jets and Knicks. Once a year you can find him on a couch with friends marathoning The Lord of the Rings trilogy--extended editions. Follow Rob on Twitter at @rjmarvin1.", "@type": "Person", "image": "https://assets.pcmag.com/media/images/638143-rob-marvin.jpg?thumb=y&width=85&height=85", "name": "Rob Marvin"}, "headline": "Apple Is Ramping Up R&D to Find Its Next Big Product", "@type": "NewsArticle", "mainEntityOfPage": {"@id": "https://uk.pcmag.com/news/121931/apple-is-ramping-up-rd-to-find-its-next-big-product", "@type": "WebPage"}, "@context": "https://schema.org", "dateModified": "2019-08-02 09:48:54+00:00"} Apple Is Ramping Up R&D to Find Its Next Big Product - PCMag UK " /> Skip to main content PCMag UK By Rob Marvin 2 Aug 2019, 11 a.m. Amid stagnant growth and declining profits, Apple is pouring money into research and development as its services revenue continues to make up a bigger chunk of the pie. We review products independently, but we may earn affiliate commissions from buying links on this page. Terms of use. Apple's Q3 earnings came with good news and bad news. The tech giant's services segment continues to grow steadily and helped buoy Apple's overall revenue growth, but profits dipped more than 12 percent amid declining iPhone sales. Though Apple's services, wearables, and accessories products are still showing healthy growth, the iPhone has been its cash cow for a decade. As the smartphone market stalls and iPhone sales stagnate, Apple needs a breakthrough technological innovation the likes of which we haven't seen much of during the Tim Cook era. And the company knows it. So it's not surprising that Apple spent a higher percentage of its total sales revenue in Q3 on research and development than it had in any quarter since before the launch of the iPhone. The company spent $4.26 billion on R&D in Q3, or 7.9 percent of its total sales. Overall, Apple has allotted 6.2 percent of its 2019 sales revenue to R&D, its highest percentage since 2003. Over the past decade, Apple's yearly R&D spending has risen from $1 billion in 2009 to a projection of more than $13 million in 2019. As for where all that money is going, the company has invested in AI, autonomous cars, augmented reality, biometrics, and plenty more we may never know about unless a product is unveiled. In the meantime, Apple is quadrupling down on its services business. The growing revenue umbrella includes iCloud and Apple Music subscriptions, App Store and iTunes sales and commissions, Apple Pay fees, and newly announced services such as Apple News+ and Apple TV Channels. In Q3, Apple's services revenue accounted for 21 percent of total sales, reaching a new high of $11.5 billion, up only incrementally from last quarter but 12 percent year over year. This quarter is also the first time iPhone sales dipped below 50 percent of Apple's total revenue. There's a reason Apple and other tech powerhouses are bolstering their cloud-based services portfolios. The profit margins are extremely high, and services carry recurring monthly subscription costs, providing consistent, growing revenue—as opposed to a consumer buying a device every few years. Apple's services revenue will only grow in the next year or more as its biggest bets enter the market. The Apple Card launches this month, the company's Apple TV+ streaming service will debut sometime this fall for an unspecified cost, and Apple Arcade is Cupertino's horse in the 5G-enabled cloud gaming industry, competing against Google Stadia, Microsoft xCloud, and others. Who knows whether Apple will surprise us again with a game-changing tech product on the scale of the iPhone? But while the company continues to pour more money into R&D, its services business is slowly turning Apple into not just a device- and software-maker but also a media and entertainment giant, a financial services provider, a gaming platform, and beyond. HTML MODULE 4329 Next Article More Inside PCMag.com About the Author Rob Marvin is the Assistant Editor of PCMag's Business section. He covers startups, business and venture capital, and writes features, news, and trend stories on all manner of emerging technologies. Beats include: blockchain, artificial intelligence and cognitive computing, augmented reality, legal cannabis tech, social media, the mobile app economy, digital commerce and payments, cloud, Big Data, low code development, containers and microservices, deep linking, equity crowdfunding, M&A, SEO, and enterprise software in general. Rob was previously an editor at SD Times covering software, managing social media, and writing narrative-driven features on any offbeat story or trend he could find. He graduated from Syracuse University's S.I. Newhouse School of Public Communications ... See Full Bio Please enable JavaScript to view the comments. Ad So it's not surprising that Apple spent a higher percentage of its total sales revenue in Q3 on research and development than it had in any quarter since before the launch of the iPhone. The company spent $4.26 billion on R&D in Q3, or 7.9 percent of its total sales. Overall, Apple has allotted 6.2 percent of its 2019 sales revenue to R&D, its highest percentage since 2003.\nOver the past decade, Apple's yearly R&D spending has risen from $1 billion in 2009 to a projection of more than $13 million in 2019. As for where all that money is going, the company has invested in AI, autonomous cars, augmented reality, biometrics, and plenty more we may never know about unless a product is unveiled.\n\nIn the meantime, Apple is quadrupling down on its services business. The growing revenue umbrella includes iCloud and Apple Music subscriptions, App Store and iTunes sales and commissions, Apple Pay fees, and newly announced services such as Apple News+ and Apple TV Channels.\nIn Q3, Apple's services revenue accounted for 21 percent of total sales, reaching a new high of $11.5 billion, up only incrementally from last quarter but 12 percent year over year. This quarter is also the first time iPhone sales dipped below 50 percent of Apple's total revenue.\nThere's a reason Apple and other tech powerhouses are bolstering their cloud-based services portfolios. The profit margins are extremely high, and services carry recurring monthly subscription costs, providing consistent, growing revenue\u2014as opposed to a consumer buying a device every few years.\n\nApple's services revenue will only grow in the next year or more as its biggest bets enter the market. The Apple Card launches this month, the company's Apple TV+ streaming service will debut sometime this fall for an unspecified cost, and Apple Arcade is Cupertino's horse in the 5G-enabled cloud gaming industry, competing against Google Stadia, Microsoft xCloud, and others.\nWho knows whether Apple will surprise us again with a game-changing tech product on the scale of the iPhone? But while the company continues to pour more money into R&D, its services business is slowly turning Apple into not just a device- and software-maker but also a media and entertainment giant, a financial services provider, a gaming platform, and beyond.\n HTML MODULE 4329 ", "image": [{"url": "https://sm.pcmag.com/pcmag_uk/news/a/apple-is-r/apple-is-ramping-up-rd-to-find-its-next-big-product_dhda.jpg", "width": 1920, "caption": "Apple Is Ramping Up R&D to Find Its Next Big Product", "@type": "ImageObject", "height": 1080}], "datePublished": "2019-08-02 10:00:00+00:00", "publisher": {"url": "https://uk.pcmag.com", "logo": {"url": "('https://uk.pcmag.com/s/',)pcmag/pcmag_logo_micro.png", "width": 245, "@type": "ImageObject", "height": 60}, "@type": "Organization", "name": "PCMag UK"}, "about": "", "author": {"jobTitle": "Assistant Editor, Business", "description": "Rob Marvin is the Assistant Editor of PCMag's Business section. He covers startups, business and venture capital, and writes features, news, and trend stories on all manner of emerging technologies. Beats include: blockchain, artificial intelligence and cognitive computing, augmented reality, legal cannabis tech, social media, the mobile app economy, digital commerce and payments, cloud, Big Data, low code development, containers and microservices, deep linking, equity crowdfunding, M&A, SEO, and enterprise software in general.\n\nRob was previously an editor at SD Times covering software, managing social media, and writing narrative-driven features on any offbeat story or trend he could find. He graduated from Syracuse University's S.I. Newhouse School of Public Communications in 2013 with degrees in Magazine Journalism and Psychology. You can also find his business and tech coverage on Entrepreneur and Fox Business. \n\nRob is also an unabashed nerd who does occasional entertainment writing for Geek.com on movies, TV, and culture. He reads epic fantasy and historical fiction, and enjoys having his heart routinely broken by the Jets and Knicks. Once a year you can find him on a couch with friends marathoning The Lord of the Rings trilogy--extended editions. Follow Rob on Twitter at @rjmarvin1.", "@type": "Person", "image": "https://assets.pcmag.com/media/images/638143-rob-marvin.jpg?thumb=y&width=85&height=85", "name": "Rob Marvin"}, "headline": "Apple Is Ramping Up R&D to Find Its Next Big Product", "@type": "NewsArticle", "mainEntityOfPage": {"@id": "https://uk.pcmag.com/news/121931/apple-is-ramping-up-rd-to-find-its-next-big-product", "@type": "WebPage"}, "@context": "https://schema.org", "dateModified": "2019-08-02 09:48:54+00:00"}

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