Apple Finances by Utility Patent Count

The story of Apple Inc. is exciting and tumultuous, as one might expect from the most profitable company in the world. From a partnership in a garage that drove the beginnings of personal computing, through a decline in the early 1990s, Apple surged back in the mid-2000s to their current status as an ever-climbing industry giant. Beyond the dramatic human element of charismatic leadership and compelling design and branding, the sheer financial growth is well worth analyzing. And, as with anything worth understanding, it's complex and resists a simple explanation.

What can we learn by comparing Apple's patent counts with their financial data? It turns out, there's a strong correlation between the two. Apple's utility patent counts are relatively even from 1995 - 2007, but rise sharply starting in 2008. Similarly, Apple's earnings per share (in this case, a direct reflection of their profit) starts rising in 2005. What can we conclude from this?

As always, we must be careful not to stamp our analysis with a conclusion prematurely. Does this correlation point to a causation? And, even if it does, in which direction? Does greater profit and revenue generate greater R&D budgets, thereby increasing patent generation, or do patents (in general) generate profit and revenue directly? Or is it some mix of the two?

To better understand the subtleties here and build confidence in our conclusions, we would need to observe this same relation for other companies. What about Microsoft, IBM, Intel, and Samsung? Do we find the same correlation, or does the data point toward a more complex model?

Sources:
Final Tabulation - Patenting by Organizations Report, Single Year Reports, 1995 to Present
http://www.uspto.gov/web/offices/ac/ido/oeip/taf/reports_topo.htm

Wolfram Alpha - Apple EPS
http://www.wolframalpha.com/input/?i=apple+eps

Wolfram Alpha - Apple Revenue
http://www.wolframalpha.com/input/?i=apple+revenue

Wolfram Alpha - Apple Profit
http://www.wolframalpha.com/input/?i=apple+profit

NeXT acquisition press statement
https://web.archive.org/web/19990128101420/http://product.info.apple.com/pr/press.releases/1997/q2/970207.pr.rel.next.html

iMac Release statement
https://web.archive.org/web/20010306050849/http://www.apple.com/pr/library/1998/aug/13mktg.html

iPod Article
http://www.apple.com/pr/library/2001/10/23Apple-Presents-iPod.html

iPhone Release statement
http://www.apple.com/pr/library/2007/01/09Apple-Reinvents-the-Phone-with-iPhone.html

iPad Release statement
http://www.apple.com/pr/library/2010/01/27Apple-Launches-iPad.html