Comments on: Apple Bracing for Recession http://jaxn.org/article/2008/01/15/apple-bracing-for-recession/ the philosophy of technology Sat, 05 Jul 2008 16:13:22 +0000 http://wordpress.org/?v=2.5.1 By: fishwreck http://jaxn.org/article/2008/01/15/apple-bracing-for-recession/#comment-33807 fishwreck Thu, 17 Jan 2008 03:28:45 +0000 http://jaxn.org/article/2008/01/15/apple-bracing-for-recession/#comment-33807 With 2+ years of development and 100 or so prototypes, I'm not sure it's safe to say that there wasn't significant R&D expenditure by Apple on the MacBook Air. (http://www.appleinsider.com/articles/08/01/16/steve_jobs_talks_macbook_air_china_mobile_amazon_kindle_more.html) And even though no hardware announcements were made, I'd imagine the continuing development of the iPhone and iPod platforms are consuming significant resources. A quick check of stock research notes shows increasing R&D expenditures at Apple for the past 5 years (although the growth rate in R&D trails the absurd growth in revenue). Rather than reflecting a recessing economy, I'd say Apple's focus on software updates indicates an emerging strategy of adding/delivering value to products over time. Apple's accounting methods for iPod and iPhone are specifically built around this approach. In essence, they're treating the selling price as including a software upgrade subscription. It's a lot like the old days when all Mac OS updates were free and an expected benefit of the platform. Buy in to the platform with a hardware purchase and get a regular delivery of new features for free. What other computer or consumer electronics companies do this to a similar extent? With 2+ years of development and 100 or so prototypes, I’m not sure it’s safe to say that there wasn’t significant R&D expenditure by Apple on the MacBook Air. (http://www.appleinsider.com/articles/08/01/16/steve_jobs_talks_macbook_air_china_mobile_amazon_kindle_more.html)

And even though no hardware announcements were made, I’d imagine the continuing development of the iPhone and iPod platforms are consuming significant resources. A quick check of stock research notes shows increasing R&D expenditures at Apple for the past 5 years (although the growth rate in R&D trails the absurd growth in revenue).

Rather than reflecting a recessing economy, I’d say Apple’s focus on software updates indicates an emerging strategy of adding/delivering value to products over time. Apple’s accounting methods for iPod and iPhone are specifically built around this approach. In essence, they’re treating the selling price as including a software upgrade subscription.

It’s a lot like the old days when all Mac OS updates were free and an expected benefit of the platform. Buy in to the platform with a hardware purchase and get a regular delivery of new features for free. What other computer or consumer electronics companies do this to a similar extent?

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