Investor Khosla Says Dell-EMC Merger Will 'Set Back Innovation'; Partners Unmoved

Partners are not impressed with former Sun Microsystems co-founder and billionaire investor Vinod Khosla's assessment of the merger of Dell and EMC.

Speaking at the Structure conference in San Francisco on Wednesday, Khosla said Dell's proposed $67 billion acquisition of EMC makes clear financial sense, but is unlikely to deliver any technology innovation, according to reports.

"It will set back innovation and distract from innovation," Khosla, a co-founder of Sun Microsystems and pioneer of server technology, said of the blockbuster merger announced last month. He also said Dell, EMC and IBM hadn't "introduced what I consider one new idea over the last 30 years. … Mostly they've spent their last few years engineering financials."

[Related: Partners Confident Dell-EMC Deal Will Be Completed, Unfazed By Reported Tax Concerns]

Channel partners brushed off Khosla's arguments.

"That seems like a harsh comment," said a top executive at one large Dell and EMC partner. "Didn't Sun fail?"

Both Dell and EMC declined to comment.

A badly foundering Sun was bought by Oracle in a rocky 2010 acquisition. Khosla left Sun in the mid-1980s, not long after it was founded.

More broadly, Khosla took on what he sees as a lack of innovation in hardware technology, saying industry stalwarts "ran out of steam around 2000 to 2005."

Khosla, founder of Silicon Valley investing powerhouse Khosla Ventures, said almost all of the industry's innovation is coming from startups, and that he expects that trend to continue -- noting that firms like Google and Amazon, not old-school hardware companies, have set the best example for truly innovative tech businesses.

Khosla Ventures has invested in several high-profile technology firms, including cloud networking company Arista and hyper-converged infrastructure firm Nutanix, which has a close partnership with Dell.

PUBLISHED NOV. 19, 2015