Big companies often invest in research and development to promote growth and profitability. Yet this expense can sometimes be a waste. For every Intel or Merck, which invests wisely, there is an AMD or HP, which does not. Of the 50 American companies that spend the most on research and development (R&D), five lose money, and the net margin of another 15 is less than 10%.
The effectiveness of R&D spending can be measured in several ways. One is the number of patents filed each year. However, patents do not always produce revenue in and of themselves. IBM filed the most patents in the United States last year, while Apple filed only a fraction of that. Notwithstanding recent developments, Apple has been the more successful of the two by far over the past decade.