Apple’s R&D spending levels should be wake-up call for policymakers

[Commentary] “Apple is a low-tech firm.” That somewhat controversial proposition was put to attendees of this week’s 21st biennial conference of the International Telecommunications Society by keynote speaker Professor Martin Fransman of Edinburgh University. Using data from a wide range of publicly-listed IT firms – including Microsoft, Google, Samsung, and Cisco – Professor Fransman showed that Apple’s research and development spend as a proportion of revenue was among the lowest of the group. As R&D spend is one of the typical metrics used by policymakers to assess the “success” of firms in developing new technologies, then Apple is, he contended, a (comparatively) low-tech firm.

The notion that Apple has been one of the world’s most innovative businesses despite an apparent low commitment to R&D poses a paradox for policymakers. The first challenge for policymakers may be to reconsider the information collected and used to assess performance. The risk is that without full information on how the ecosystem functions, exogenous policy interventions may harm rather than assist the ecosystem’s evolution.

[Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand]