Around the Net
Facebook Keeps R&D At Arm's Length
- Bloomberg, Monday, March 19, 2012 12:14 PM
Despite -- or, perhaps, due to -- the Web’s rapid evolution, Facebook devoted a mere 10% of sales revenue to R&D in 2011. That is a fraction of the level of other Web companies, including Zynga and LinkedIn Facebook, but, as Bloomberg points out, akin to the most successful tech company in history.
“Facebook spends a smaller percentage of revenue on engineering than other Internet companies, mimicking Apple’s strategy of keeping costs low by relying on outside developers for research and development,” Bloomberg writes. As a result, Facebook has been able to retain bigger profit margins than the typical prospective IPO, according to Colin Gillis, an analyst with BGC Partners. “The challenge,” as Bloomberg notes, “is maintaining that growth amid mounting competition from Google and younger startups.”
How does Facebook innovate so quickly without major investment? Remarkably, the social network is so popular that other companies and developers are happy to flood it will features and services. Yep, it’s good to be king.
