Michael Dell: our R&D spending will be twice HPE's

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Michael Dell: our R&D spending will be twice HPE's

Dell chief executive Michael Dell said the combined Dell-EMC will spend US$4.5 billion on research and development, nearly twice the level of rival Hewlett Packard Enterprise.

Responding to past criticism from HPE chief executive Meg Whitman that the debt load from the largest acquisition in IT history will result in difficulty funding critical R&D, Dell said: "We'll invest close to US$4.5 billion in R&D, which is maybe close to two times what that other company you mentioned [HPE] is investing. So any statement to the contrary would just be misinformed."

HPE, which became an independent company last November, spent US$1.2 billion in R&D through the first six months of its fiscal year ended 30 April.

Dell said the US$62 billion acquisition of EMC-VMware, which includes up to US$49.5 billion in debt, provides Dell with "enormous flexibility" to invest in the business - including in R&D - going forward thanks to historically low debt interest rates.

"If you look at the interest rates on corporate debt, you have to go back to 1956 to find lower rates," said Dell in an exclusive interview with CRN USA.

"What we have been able to do in taking first Dell private and now EMC private is create the largest enterprise systems company in the world with also a structure of investment-grade secured debt, which gives us enormous flexibility to invest in our go-to-market, our channels, our partners, our research and development. I will apologise to no one for the strength of our company. Anybody who calls it otherwise is just not dealing in facts."

Dell said the EMC-VMware acquisition is "very much on track" and will "probably" close sooner than the anticipated October timeframe.

Dell's comments come as HPE is in the midst of an aggressive push to recruit EMC and Dell partners who might be concerned that the integration of the two companies will result in confusion in the field with regard to sales coverage, product road maps and even R&D investment priorities.

Whitman has painted HPE's decision to become an independent enterprise-focused organisation with the ability to move faster and be more innovative as a sharp contrast to Dell's strategy to build a US$75 billion IT behemoth with a product line that runs from client systems to the data centre.

Whitman in May moved to spin off HPE's US$20 billion enterprise services business in a merger with systems integrator CSC that is expected to close by March, 2017. That tax-free spinoff makes HPE a stronger, US$33 billion infrastructure-focused organisation, said Whitman.

Just last month at HPE Discover, Whitman said HPE is having success recruiting Dell and EMC partners.

"We are bringing EMC partners into the fold. We are bringing Dell partners into the fold. And I think they like what they see," she said. "It seems like the enthusiasm is enormous."

Whitman told CRN USA in May that HPE has taken advantage of the uncertainty around the acquisition. "A lot of partners are asking – 'How is this exactly going to work?'" she said. "'Is EMC going to get the right amount of R&D? What is coverage model going to look like?'"

This article originally appeared at crn.com

Copyright © 2016 The Channel Company, LLC. All rights reserved.
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