Dell: Computer Maker Gets By On Scant R&D Budget

Dell: Computer Maker Gets By On Scant R&D Budget
-->Oct. 28, 2002

http://informationweek.com/story/IWK20021025S0004
http://www.themacobserver.com/article/2003/11/24.5.shtml
http://www.gsm.uci.edu/NewsAndEvents/InTheNews/InTheNews.aspx?NewsArticleID=367

Dell Computer spent just 1.3% of revenue for its second quarter on research and development.By Aaron Ricadela InformationWeek

While many of the largest technology companies budget 5%, 15%, and higher portions of revenue for research and development, one computing industry star isn't even in the ballpark. Dell Computer spent a paltry 1.3% of revenue for its second quarter ended Aug. 2 -- about $111 million -- on R&D.

The investment is typical for Dell, which has been profitable in the tough PC and enterprise computing markets where others have faltered. A year ago, Dell spent 1.5% of revenue on R&D.
By contrast, Hewlett-Packard spent 6% of revenue, or $983 million, on R&D during its third quarter ended July 31. Sun Microsystems spent 16% of revenue, or $437 million, during its first quarter, ended Sept. 30. And IBM's R&D spending was $1.2 billion, or 6.1% of revenue, for its third quarter ended Sept. 30.

Kevin Rollins, Dell's president and chief operating officer, says the company relies on "collaborative R&D," leveraging the research and engineering investments of its suppliers -- including Microsoft and Intel -- to reduce costs as more business-computing products become standardized. "There are myriad suppliers who have developed the components that go into our systems," Rollins says. "We think there's a lot of hoopla about big research budgets in companies."

Dell is trying to pare $1 billion in costs this year from product design, manufacturing, and other areas, and slipstreaming innovation from other vendors into its products could help.
For example, Dell's network-attached storage products use a component operating system from Microsoft, while products in development could employ technology from Intel and others to offload work from the computers' CPUs to their host adapters.

V.S.
http://www.sopheon.com/inknowvations.asp?id=5-1-2005
Granted, Marks's vision is more than a tad extreme. True, despite the tech recovery, many corporate R&D budgets have been tightening. HP's R&D spending long hovered around 6% of sales, but it's down to 4.4% now. Cisco Systems' R&D budget has dropped from its old average of 17% to 14.5%. The numbers also are falling at Motorola, Lucent Technologies, and Ericsson. In November, Nokia Corp. said it aims to trim R&D spending from 12.8% of sales in 2004 to under 10% by the end of 2006.

http://www.macobserver.com/article/2004/12/01.3.shtml
Apple spent US$471 million in 2003 on R&D, a 6% increase over 2002, or $25 million more than the previous year.

Apple R&D accounts for 8% of its sales, the survey showed. The Mac and iPod maker spends $34,719 on R&D for each of its employees.

The 2004 R&D Scorecard of the top 150 spenders showed Apple sixth among the top nine computer hardware makers in spending. IBM was first among computer companies and 19th overall, followed by Hewlett-Packard in second and 24th overall. In comparison, IBM spent $5 billion on R&D in 2003; HP spend $3.6 billion. IBM had a 7% increase in R&D spending, or $318 million more. HP spent 10% more, or $340 million.

The trend among computer manufacturers in 2003 was to spend less on R&D, with a .4% overall decline.