{"id":277,"date":"2017-09-26T16:15:07","date_gmt":"2017-09-26T22:15:07","guid":{"rendered":"http:\/\/redmonk.com\/rstephens\/?p=277"},"modified":"2017-09-26T16:15:07","modified_gmt":"2017-09-26T22:15:07","slug":"cloud_rd","status":"publish","type":"post","link":"https:\/\/redmonk.com\/rstephens\/2017\/09\/26\/cloud_rd\/","title":{"rendered":"R&D Spending for Cloud Providers"},"content":{"rendered":"

A June 2017 Bloomberg analysis<\/a> of top global R&D spending found “Amazon.com Inc. passed Volkswagen AG late last year to become the world’s biggest corporate spender on research and development.”<\/p>\n

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Image source:<\/em> Bloomberg<\/a><\/p>\n

In September 2017 Recode<\/a> published a similar analysis comparing research and development (R&D) spending across U.S.-based companies. The top five U.S.-based R&D spenders in FY2016 were all tech companies, led by Amazon with $16.1B in R&D expense. Recode asserted this is “a figure that should strike fear into its competitors.”<\/p>\n

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\nImage source:<\/em> Recode<\/a><\/p>\n

These headlines caught our eye, and we were curious: just how fear-inducing should Amazon’s R&D spending be, specifically for other cloud providers? After all, Alphabet (parent company of Google), Microsoft, Oracle, and IBM are also reflected in these lists of top R&D spenders. Are there any telling R&D trends amongst this group that helps reveal their competitive positioning?<\/p>\n

Caveats<\/h2>\n
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  1. The below analysis is confined to U.S.-based cloud providers Amazon, Alphabet, Microsoft, Oracle, and IBM. Our past analysis<\/a> of cloud infrastructure included players that we are excluding here: CenturyLink does not provide a breakout of R&D numbers, Rackspace has since gone private<\/a>, and HPE has stopped competing in public cloud<\/a>.<\/p>\n<\/li>\n
  2. \n

    There are some fairly significant caveats to using publicly available financial data for this analysis. The most notable is that all of these companies have other major lines of business that obfuscate the impact of their cloud strategy in their consolidated financial statements. We do not claim that R&D numbers below are exclusively related to cloud, nor to we assert that the totality (or even majority) of a company’s cloud development spending is captured in their R&D.<\/p>\n<\/li>\n<\/ol>\n

    R&D by Cloud Providers<\/h2>\n

    The above charts show R&D spending for the prior fiscal year, but how has that evolved over time?<\/p>\n

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    A few observations:<\/p>\n