Apple: Frugal to a Fault?

With its sleek iPod nano and all-in-one iMac computer, Apple (AAPL Quote) is often perceived by its fans as a pre-eminent innovator.

It may come as a surprise, then, that much of the company's recent financial -- and stock -- success has resulted from merely holding the line on one of the sources of that innovation: its spending on research and development.

Even while Apple's revenue has skyrocketed in recent years -- and even as expectations for future products and success have exploded -- what the company has spent on R&D has risen only modestly. As a portion of overall sales, such expenses have actually fallen by more than half. ...