Dive Brief:
- Dell CEO Michael Dell says that the new company formed through the merger of Dell and EMC will invest $4.5 billion on R&D in the coming year—nearly twice as much as Hewlett Packard Enterprise did last year, according to a CRN report.
- Dell was responding to recent comments from HPE CEO Meg Whitman, who speculated that the costs associated with the Dell/EMC merger will make it difficult for the new company to invest much in R&D.
- HPE spent $1.2 billion in R&D in the first six months of its fiscal year ended April 30, according to CRN.
Dive Insight:
The gloves are coming off. Both Dell/EMC and HPE are fighting for the similar customer base and investing in new products and services will help them both stay competitive. In 2015, HPE dominated cloud IT infrastructure, holding 15.7% of the market. Dell and EMC followed close behind with 10.6% and 7.6%, respectively. Once the merger is complete, Dell/EMC is poised to overtake HPE in market share.
The $62 billion Dell/EMC merger is expected to close by October. The purchase includes up to $49.5 billion in debt. Whitman has focused recent comments on that debt as well as the uncertainty the merger may generate to try to recruit Dell and EMC customers.
Last month, HPE reportedly spoke to "several hundred" Dell-EMC partners during HPE’s Discover Conference in hopes of recruiting them to sell the HPE product portfolio. The company also offered "special accommodations" to allow partners to move into the HPE channel program at the same level they are at with Dell-EM, according to reports.
"Those EMC partners are worried about how much R&D EMC is going to get in the future," HPE CEO Meg Whitman told CRN. "And EMC has grown through acquisitions. Trust me, there is not going to be any capital available for acquisitions for a while."
