Apple's CFO explains the company's $10 billion R&D budget (AAPL)

Apple is pouring money into research and development (R&D) in an attempt to improve products that don't currently generate revenue, but might in the future, according to remarks made by Apple CFO Luca Maestri at the Goldman Sachs investor conference .

The company spent a massive $2.8 billion on R&D in Q4 2016, bringing the segment to nearly $10.5 billion in total for the year.

It's normal for R&D to increase in line with growth and new product development, but Apple's annual spend is up by roughly $4 billion since 2014, marking a uniquely significant bump.

There are three primary drivers behind this push:

Apple’s reliance on iPhone revenue makes innovation and product improvement top priorities. The company’s revenue is primarily based on income generated by the iPhone. The pool of first-time smartphone buyers who can afford the iPhone is shrinking, which means the company needs to convince users on other platforms to switch to iOS to find continued growth. Innovation is one way to do that. And as Apple continues to develop in emerging categories, like augmented reality (AR), virtual reality (VR), and the self-driving car space, it's unlikely that R&D spend will slow down any time soon.

Cloud computing — on-demand, internet-based computing services — has been successfully applied to many computing functions in recent years.

From consumer-facing, web-based productivity apps like Google Docs to enterprise database management suites, the tools businesses rely on are increasingly moving to the cloud.

But developing a cloud strategy is no easy task. Public cloud solutions will likely come to dominate the market over the next decade, but business constraints, such as security concerns and the limitations of existing infrastructure, make it difficult for companies to fully adopt the public cloud right now.

That means that hybrid clouds,in which multiple cloud implementations (including public and private) are connected,will remain popular for the time being, at least until these constraints are addressed. The tech giants that dominate the IaaS market — Amazon, IBM, Microsoft, and Google — are constantly expanding their offerings to address current business constraints as they compete for market share.

Christina Anzalone, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that evaluates the current business considerations for the various cloud solutions and provides an outlook on the state of the market.

Here are some of the key takeaways from the report:

In full, the report: