A Sneak Peek Inside Apple's R&D Lab

| About: Apple Inc. (AAPL)

One of the biggest concerns for Apple (NASDAQ:AAPL) investors involves Apple's pipeline of new products. In the absence of clear cut guidance from the company (something Apple executives are loathe to do) investors are left to use their imagination and make guesstimates about the earnings impact of hypothetical product releases.

The consensus interpretation is that Apple is becoming less innovative in product development and less aggressive in exploiting emerging markets. My own read is that Apple is never going to dominate those markets anyway due to the inherent limitations of the emerging market consumer, and that the R&D cycle is taking longer due to the complexity of the products.

Who's interpretation is correct? One thing that would help us decide the question if we could peek inside of Apple's R&D lab.

But that's top secret, isn't it?

Beyond Proprietary

Not so much.

Just because a technology is being developed in a super-secret lab somewhere and surrounded by layers of Mission Impossible-level security doesn't mean that's wholly restricted from public view. Many of Apple's most important innovations were originally created for unrelated products that antedate the development of the iPhone, such as Pub# EP1621989 "Touch-sensitive electronic apparatus for media applications" (2005).

"An electronic apparatus, such as an electronic mixing apparatus and an electronic keyboard apparatus, and associated methods are disclosed. The electronic mixing apparatus or the electronic keyboard apparatus is provided on a touch screen that provides user input and display capabilities. In one embodiment, the touch screen is a multipoint touch screen so that multiple user touch inputs can be simultaneously acquired." [emphasis mine]"

While disruptive products are perceived by the public to be an event, they are more often the cumulative result of hundreds of initially unrelated or imperfect innovations.

Let's take a look at some of Apple's.

Virtual Keyboard (Patent Pub #US 20120227006A1)

When most people think of keyboards, they think of an array of buttons. But a keyboard is really just a positioning system copied from IBM's hugely successful Executive Electric Typewriter and teletype machines. Theoretically, we can type anywhere we want; as long as the computer understands that by placing our finger here instead of there, we mean the letter "A" and not "T." Apple's implementation of this concept varies by patent, but typically involves a blank, razor-thin Touch surface.

When will it happen? Likely 2014. Apple has published a number of refinements to its original concept, extending the virtual keyboard concept to the iMac+ to the as-yet-unreleased iMac Touch. It's important to remember as well that keyboards aren't a one-way street. Key depression also provides feedback to the user through the fingertips, and that means a multi-tiered haptic system like that found in Apple patent US20120105333 A1. As of this writing, Apple continues to refine its haptic capabilities across all product lines.

Principal Competition: Microsoft. (NASDAQ:MSFT) Redmond has been no slouch in the total immersion space. Whatever you may think of the company's in-house policies or soon to be former CEO, Microsoft's engineers are three steps ahead of the curve. Of particular note are Microsoft's "HoloDesk" concept (pub# #US20120117514 A1) and a next gen keyboard (pub#: US20120068934 A1) that transcends the input-only keyboard paradigm by building display capabilities into the keys, a keyboard can be an interactive experience, rather than a "dumb" peripheral device beyond the inherent limitations of QWERTY.

Wraparound Display

In the world of high tech R&D, it's all too easy to blow a billion dollars with little or nothing to show for it. Display is one of the few areas where higher R&D spending is producing proportionately rapid technological breakthroughs. The result is fierce competition in producing display patents by virtually every player in the space, and Apple's advantage in conventional display technologies is diminished accordingly. Apple has responding with a surgical approach that focuses on only a few key innovations. One of them is the Wraparound Display.

Meet your next iPhone. (Patent Pub# US20130076612 A1)

The housing is almost completely transparent with a flexible display assembly contained inside that is capable of displaying content on virtually any portion of the device.

When will it happen? 2015. The technological difficulties in executing this design pale in comparison with the inevitable manufacturing issues. Making such a design intuitive also presents a formidable challenge, but one for which Jony Ive is well suited.

Principal Competition: Samsung. (OTC:SSNLF) The South Korean juggernaut is currently flooding both the Korean and U.S. POs with display patents. The figure below, taken from patent Pub #WO2013089392 A1, "Bendable display device and displaying method thereof" is fairly representative of Samsung's vision for the future of display.

Samsung's current time-line for replacing every LCD/Plasma screen on the planet with various omni-directional and foldable display technologies is 2015-2016. If Apple can execute its vision faster, the rewards - simply in terms of pricing power - would be considerable, indeed.


If reaching out into empty space and manipulating three holograms at high speed like Tom Cruise in The Minority Report sounds to you like it would be a jarring experience, worry not: By the time that technology is fully mature, its effects on the masses will be evolutionary rather than revolutionary.

Apple's Multi-Touch Skins for 3D surfaces (Pub# WO2008085790 A2) bridges that divide. Steve Hotelling and Wayne Westerman, the driving forces behind many of Apple's touch-related patents, are credited as the inventors. Touch Skins can be applied to any object that shares a common interface: A steering wheel, a baseball bat, a remote control, the neck of a guitar, the arms of a chair, a classroom globe, whatever you want. (They're also portable.)

Principal Competition: Microsoft. Microsoft is the leading contender in the body-wearable and object-enhancing space, due to its laser-like focus on consumer gaming.

When will it happen? 2015-2020. Multi-touch skins require advances in everything from ubiquitous high speed internet coverage to materials science. More importantly, Apple (and everyone else) waiting on Intel's (NASDAQ:INTC) Rosepoint technology to come online in 2015 in order to have a shot at implementing The Internet of Things.


Today's secret labs are closer, in terms of both funding and HR, to the Manhattan Project and the Apollo Space Program than they are to Xerox PARC and Bell Labs. While some readers may balk at the idea of comparing a phone to an atomic bomb or walking on the moon, the challenges are no less numerous or difficult simply because the technology is in every day use. If the products that investors are pounding the table for are taking longer for Apple to develop, it's because the materials science and infrastructure-in-place hasn't caught up with the imagination of Cupertino's engineers, not because Cupertino's engineers' lack for imagination.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.