Newswise — Captains of industry know the competitive advantage that a healthy research and development operation provides. Last fall, Microsoft Corp.'s chairman, Bill Gates, loudly trumpeted Microsoft's plans to boost R&D spending by 20 percent this year, even though his company cut R&D spending by 1.6 percent in 2002. Chairman and CEO Jeffrey R. Immelt of General Electric Co. (ranked 40 among the top 100 in R&D expenditures in 2002) has stated simply that GE's growth depends on increases in R&D spending. Putting the company's money where his mouth is, Immelt boosted GE's R&D spending in fiscal year 2002 (FY '02) by a solid 12 percent, or US $235 million.
With a company's future at stake, it's no wonder that investors, corporate managers, and other decision-makers keep close tabs on the R&D spending of companies they're involved with and of their competitors. R&D watchers need look no further than the IEEE Spectrum list of the Top 100 R&D Spenders in 2002 to gauge the possible trajectory of future technological innovation for these companies.
Some firms, such as Advanced Micro Devices Inc. (ranked 83 among the top 100), increased R&D spending last year despite lower sales. Other firms, such as Microsoft (ranked 10), decreased R&D spending despite sales growth, a trend that Gates, true to his word, has reversed through the first two quarters of 2003 by increasing R&D spending by 8.8 percent. Overall, for FY '02, aggregate R&D spending has tracked sales and moved slightly downward from totals for the year before. Industry by industry, there are some stark differences, however, with significant increases in spending by companies in the Automobiles & Components sector and large decreases by categories in the Technology Hardware & Equipment category.
The past year was difficult for many of the large R&D spenders. Certain sectors, such as Automobiles & Components with firms like Toyota Motor Corp. (ranked 5), recorded increases in sales as well as in R&D. In sharp contrast, the Technology Hardware & Equipment sector, with firms such as Sun Microsystems Inc. (47) and Cisco Systems Inc. (17), had significant declines in both R&D and sales. But though the Semiconductors & Semiconductor Equipment sector had a steep decline in sales of 8.5 percent, its R&D fell only 1.1 percent. On the other hand, despite gains in sales for the Software & Services sector, its R&D spending decreased.
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