Speedfilm

The 'Four Horsemen of Tech' Are Not Equal

The author has analyzed R&D in just about the worst way possible. R&D is a long term investment: comparing results over the short term is largely irrelevant to the effectiveness of an R&D investment. Some R&D investments may not generate income for at least 10 years, and this can vary widely. So the R&D portfolio of a company must be understood to get an idea about the expected outcome.

For the data here, it would be better to compare 2003's R&D to 2007's operating income. (or better yet, free cash flow). I did notice one thing here: Retailers typically have a very low % of R&D to income. So I would want to know why Amazon's is so high. There may be a good reason for it, but on the face it raises a flag.

R&D should give a company sustainable differentiation. Which of these companies is best able to protect its future cash flows against competitive technology?