Dell-EMC deal will 'set back innovation,' says Sun co-founder Vinod Khosla

Instead, businesses should look towards startups to provide innovative solutions

20151118 vinod khosla structure

Vinod Khosla speaks at the Structure conference in San Francisco on November 18, 2015.

Credit: Blair Hanley Frank

While he thinks Dell buying EMC makes sense financially, Sun Microsystems co-founder Vinod Khosla has little faith in the merged company's ability to innovate.

"EMC and Dell merging is a really good financial move for Michael, but it will set back innovation and distract from innovation," said Khosla, now a prominent venture capitalist, in an onstage interview at the Structure conference in San Francisco on Wednesday.

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Asked about the future for old-line technology companies like Cisco, IBM and Dell, Khosla was pessimistic. In his view, only about half of those tech titans will stick around in the future. What's more, he said, innovation from those companies has been seriously lacking.

"They did not introduce what I would consider one new idea over the last 30 years," Khosla said. "They're all pretty good businesses, but mostly they've spent their time engineering financials."

The tech industry should expect to see much more innovation driven by startups compared to moves from large enterprises.

"I think most of the innovation, 80 percent of it or 90 percent of it, will come from startups," he said.

That remark wasn't intended as a knock against companies like Cisco and IBM, he said. They have valuable resources like brand recognition and relationships with major customers. He's in favor of established companies partnering with startups so the former can get access to new technology and the latter can benefit from the larger businesses' market position.

That's not a surprising stance for Khosla, a founding partner at Khosla Ventures, which has invested in the likes of Mesosphere and Nutanix. 

As for those large companies that hope to stick around, Khosla said Microsoft is a beacon of possibility for its peers. He complimented the moves that the company has made, especially under the leadership of CEO Satya Nadella.

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