Apple's research and development costs have risen 4%. What's it working on?

The company very slightly missed sales expectations, but R&D costs spiked. Meanwhile, sales of iPads are slowing.

by Emma Haslett
Last Updated: 28 Aug 2014

Ah, Apple results day: traditionally a day for much back-slapping among Silicon Valley-ites as the company announces bumper sales. Not so much in yesterday’s third-quarter results, mind: the sales Apple reported weren’t quite up to analysts’ high standards. It might have sold 35.2 million iPhones (13% more than during the same period last year), but that wasn’t enough for investors. Shares fell 0.57% in after-hours trading.

Alright, so that may also be something to do with iPad sales slipping 9% to 13.2 million. But sales increased 6% to $37.4bn (£21.9m), while profits hit $7.7bn, ahead of analyst expectations.

The company has also gone down a storm in China, where sales of iPhones rose 48% after Apple signed its deal with China Mobile back in December. Although it’s worth pointing out that until then, iPhone sales in the country had been negligible. So it’s a 48% rise on not very much.

What’s all the fuss about, then? Shareholders are presumably worried about a new ‘category changer’, like the iPad or the iPhone - or lack thereof.

What is interesting is the company’s research and development costs spiked 4% during the quarter, suggesting something exciting might be about to happen. For years now, there’s been talk of an iWatch, but that’s still yet to appear - although on Tuesday, the company was granted a patent for an ‘electronic wristband’ called ‘iTime’.

Tantalisingly, finance chief Luca Maestri said that ‘when you think about our product cycle, we don’t get into the specifics but you know this is not exactly the same cycle that we had a year ago’. Ooooh.

If we’re honest, though, there may be a while to wait before the iWatch hits the shelves. Until then, fanboys will have to make do with the iPhone 6, due for launch later this year. Rumours about the device have been whizzing around for months, but yesterday it put in an order for 80 million 4.7- and 5.5-inch screens. So new iPhones are going to be bigger - but presumably it didn't cost a 4% rise in r&d to decide that...

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