Apple is generally regarded as an innovator and a trendsetter, however, it is interesting to note that they spend a lot less on research and development than other companies.

Apple's stock and revenue has skyrocketed over the recent years, but its R&D expenses have risen only moderately. In fiscal year 2001, Apple was spending 8 percent of sales on development, while last year they spent only 3.8 percent and in the last quarter just 3.2 percent.

It might look like Apple has been cutting down on R&D spending; that is not the case, as last year the company spent $534 million, 24% more than in fiscal 2001. The case is that while Apple is earning a lot more, they are not pumping a proportional amount of cash into research and development.

From this point of view, Apple seems to get more for their money than anybody else. Companies such as Microsoft and Sony and IBM spend almost ten times more on R&D than Apple, and yet one would be hard pressed to say that they have had ten times more the hit products.

Many analysts are already getting worried and state that Apple cannot keep spending so little on research and development if it is to continue to be an innovator. At the end of the day, Apple knows best, it seems.