Apple: Frugal to a Fault?

TheStreet.com writes that much of Apple's "recent financial -- and stock -- success has resulted from merely holding the line on one of the sources of that innovation: its spending on research and development." According to the article, "what the company has spent on R&D has risen only modestly. As a portion of overall sales, such expenses have actually fallen by more than half. Last year, Apple spent 3.8% of sales on development, and it spent just 3.2% in its most recent fiscal quarter. The company spent $534 million on development in fiscal 2005, which was 24% more than it spent in fiscal 2001."

Van Baker at Gartner said, "Ultimately, for them to sustain their growth and be successful in the long term, they're going to have to move in new directions and tackle some new product lines that they don't have and haven't historically done. That's going to take significant investment."

Crawford Del Prete at IDC added, "At some point, that reaches stasis. They can't take it down to 1.5% or 2% of revenue."