Developing your products is a very important aspects in any manufacturing business. Progression of products could mean the success or failure, profit or loss to a company, especially a company with Samsung’s reputation. By now we all know that Samsung is one of those companies that keeps pushing the boundaries of technology and always pushing new applications of everyday objects like our smartphones. They make them smarter, runs more intuitive and form up some new sort of smartphone application that could help us in everyday activities. The direction of the progression of course is a trial and error sort of thing; some works and catch on, some do not work and just got scrapped in total or applied somewhere else. Developing these kinds of thing requires plenty of research too on Samsung’s part and all these require another sort of resource as well; money, in fact plenty of it.
In the 2012 season of Formula 1 Red Bull was the winning team, much like Samsung everyone wanted to be like them. They were the top dogs and everyone uses Red Bull’s Formula 1 vehicle as a benchmark, today Samsung’s Galaxy Note series has become a benchmark to the rest of the phablet form factor, Samsung’s Galaxy S line has become a world acclaim and a benchmark to other Android smartphones. For Red Bull to become the winning team in Formula 1 in the 2012 season they had to spend US$159.4 million (MYR). In fact at the time they were one of the highest spending teams in Formula 1 alongside McLaren and Ferrari. So from what we learn from this simple story then is that winning is not cheap.
That being said, Samsung’s technological advances and throne as the world’s largest smartphone manufacturer comes at some sort of cost too. In fact as of last year Samsung Electronics has spent US$13.4 billion in Research and Development alone. Compared to 2013 that number increased by 28 percent. Higher than almost any other manufacturer in the same industry. To add to that the US$13.4 billion that they spent is also highest among the tech industry, higher even than Intel at US$10.6 billion. Compared to global businesses the only other company that spends more money in researching and developing their own technologies and products is Volkswagen at US$13.5 billion putting Samsung only below Volkswagen when it comes to their spending.
Of course this expense amount should not come as a surprise to the tech giant. Great products are hard to come by, but even harder is to create a great follow up to a great product. In the consumers tech world the Samsung Galaxy S4 is probably the best selling smartphone to date and with that kind of sales reputation you can consider then that the Galaxy S4 is one heck of a product. So to make a great follow up they need to obviously squeeze in extra and new features that consumers might like, this is where the research and development comes in and the Samsung Galaxy S5 comes in. Sames goes with the Galaxy Note 3 and Galaxy Note 4; the large form factor QHD Super AMOLED screens and Exynos chips are not cheap you know.
One more interesting fact is that Samsung is the only Asian giant company that is in the list of 20 biggest R&D spenders of 2014. The thing is the results of the R&D spending sometimes are so little we tend to take them for granted sometimes. But now you know how much money is spend on developing your new Samsung Galaxy Tab S and Galaxy phones. Lesson learnt; being on top is very expensive.