Apple’s Innovation

A survey on innovation and R&D expenditure of 1,000 companies conducted by a consultancy firm, has asserted that Apple is the most innovative company in the world in 2011.

Additionally, the $108-billion ranked 53{+r}{+d} in the overall Global Innovation 1,000. It was the 16{+t}{+h} largest R&D spender within its industry. Apple spent $2.4 billion on R&D, just 2.2 per cent of sales.

In sharp contrast, Apple’s long time rival, Microsoft, was the top spender in the software and Internet sector and was ranked by the respondents as the 6{+t}{+h} most innovative company.

Microsoft in the last quarter of 2011-12 reported its first ever quarterly net loss—of $ 494 million. This has, however, been attributed in part to the $ 6.2 billion write-down on account of its failed online ad business, aQuantive, a business it acquired earlier.

Apple’s and Microsoft’s R&D spends relative to innovativeness strengthened the conclusion that “there is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance; instead, what matters is how companies use that money and other resources, as well as the quality of their talent, processes, and decision making.”

Google and 3M got ranked second and third most innovative companies in the list of top ten.

In the survey of 2010, Facebook was the sole newcomer to the ‘top ten’ list. But in 2011, it was edged out by Amazon, which took Facebook’s 10{+t}{+h} rank. “It’s about time that the online retailer appeared,” say the authors Barry Jaruzelski, John Loehr and Richard Holman.

They note that although Amazon makes few products of its own, it “consistently develops retail strategies and services.” The Kindle was the first breakthrough e-reader, but what made it truly innovative was Amazon’s decision to link it so tightly to its e-book business, effectively cutting out the competition, they say. Further, Amazon’s foray into cloud computing continues to earn revenues.

The others in list are Samsung, GE, Microsoft, Toyota, P&G and IBM, in the order of ranking.

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