By 2020, companies will have shifted the majority of their R&D spending away from product-based offerings to software and service offerings, according to the 2106 Global Innovation 1000 Study from Strategy&, PwC’s strategy consulting business.
The need to stay competitive is the top reason why companies cited a shift in their R&D budgets towards software and services, and for good reason – according to the study, companies who reported faster revenue growth relative to key competitors allocated 25% more of their R&D budgets to software offerings than companies who reported slower revenue growth.
Note: In the following slides R&D Intensity is defined as R&D spending as a percent of revenue.
Apple spent $18.1 billion on R&D in 2015 which translates to a 3.5% R&D intensity rating per PwC study.
The company is looking ahead to some of its longer-term ventures as future growth drivers, Steve Milunovich told CNBC on Oct. 26. He said that as technologies for things like self-driving cars and virtual reality continue to improve, he believes Apple will thrive, especially considering the tech giant's significant spending on research and development last quarter.
Alphabet spent $12.3 billion on R&D in 2015 which translates to a 16.4% R&D intensity rating per PwC study.
Through the first quarter of 2016, Alphabet earned 883 U.S. patents, according to Innography. This pace of innovation which would see the corporation move past 3,500 patents if it held up all year, as reported by IP Watchdog.
3M spent $1.8 billion on R&D in 2015 which translates to a 5.8 % R&D intensity rating per PwC study.
3M has brought many of the world's most recognizable brands to market. The root of the company’s success is its business model: to foster organic growth by inventing entirely new, market-changing products, according to Robert Brands, president of Brands & Co. LLC. He told told IndustryWeek that "these disruptive technologies have not only led to new products but also to the creation of new industries."
Tesla spent $.7 billion on R&D in 2015 which translates to a 17.7 % R&D intensity rating per PwC study.
“Innovation is great; and it’s making Tesla stand out in its market, explains Annie Pilon of Small Business Trends. “But in order to attract a wide base of customers, you have to have the basic stuff like reliability down as well. That may come with time. But it’s an important thing for innovative businesses in all industries to keep in mind. “
Amazon spent $12.5 billion on R&D in 2015 which translates to a 11.7 % R&D intensity rating per PwC study.
Jeff Bezos, CEO of said he at his company “failure and invention are inseparable twins.”
At the Museum of Flights 2016 Pathfinder Awards held on Oct. 28, Bezo explained. “At Amazon, we have to grow the size of our failures as the size of our company grows.” Taylor Soper of GeekWire.. “We have to make bigger and bigger failures — otherwise none of our failures will be needle movers. It’s a very bad sign over the long run if Amazon wasn’t making larger and larger failures. If you do that all along the way, that is going to protect you from ever having to make that big hail mary bet that you sometimes see companies make right before they fail or go out of existence.”
Source: Taylor Soper of GeekWire
Samsung spent $12.7 billion on R&D in 2015 which translates to a 7.2 % R&D intensity rating per PwC study.
2017 will be a “tremendous brand and confidence rebuilding year" for Samsung Electronics, the company’s North American chief said Nov. 2 at the GSMA Mobility Live, as reported by Urvaksh Karkaria of the Atlanta Business Chronicle.
The electronics conglomerate is reeling from a global recall of its flagship Galaxy Note 7 phablet, following multiple cases of exploding batteries that caused fires.
Facebook spent $4.8 billion on R&D in 2015 which translates to a 26.9 % R&D intensity rating per PwC study.
While Facebook has said that it expects lower successive ad-revenue growth rates in the third and fourth quarters, said Credit Suisse analyst Stephen Ju, as reported by Brian Deagon, of Investor’s Business Daily. Ju said he is less concerned due to Facebook continuously boosting shareholder value creation "through continuous targeting and product improvements while at the same time mitigating consumer engagement deterioration risk."
Microsoft spent $12 billion on R&D in 2015 which translates to a 12.9 % R&D intensity rating per PwC study.
When Microsoft showed off a number of new products including 3D software baked into Windows 10, a new Surface PC and a new device for called the SurfaceDial, the reaction was the “Microsoft is now officially more innovative than Apple,”reported Julie Bort of Business Insider.
GE spent $4.2 billion on R&D in 2015 which translates to a 3.7 % R&D intensity rating per PwC study.
GE continues its innovation route with his recent partnership with Local Motors. The companies have introduced a business model, Fuse, designed to help GE "transform the manufacturing and maintenance of high-performance, reliable industrial components," reports Daniel Kobialka of Investopedia.
GE said Fuse will challenge entrepreneurs, scientists and others to identify and resolve product development challenges related to non-invasive testing technologies, in-situ imaging equipment and other business areas.
IBM spent $5.2 billion on R&D in 2015 which translates to a 6.4 % R&D intensity rating per PwC study.
“Investors seem to be fixated on the company’s past, because they don’t understand the nature of IBM’s innovation drive,” says Panos Mourdoukoutas, of Forbes.
“The company has been riding one technology shift after another in computing, a sector it has pioneered through heavy investments in R&D. And now it is beginning to ride the next technology shift driven by cognitive systems—machines that sift through massive data to identify patterns that can help humans make better and faster decisions in science, business, and government.
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