Michael Dell Defends His Company’s R&D Record

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One might think that Michael Dell is getting tired of hearing that Appleis R&D is better than Dellis. In an interview with C|Net, Mr. Dell responded to questions that compared Dellis R&D efforts to that of Apple. In his responses, Mr. Dell defends his companyis R&D legacy by emphasizing that itis supposed to be good when a company spends less of its revenues on R&D than its competitors. He also suggests that innovation can occur in other areas of the computer industry than what the end-user sees. Specifically, he says that companies can innovate how an end-user gets their computer, something Dell has lead the industry in for many years. From C|Net:

Are you beefing up R&D to make your consumer products more unique, or is it more the case of using your distribution muscle?
We have 3,600 folks in our R&D division and spend half a billion dollars a year, similar to the amount Apple spends. We donit think percentage of revenue is a good measure of success in R&D. We look at it as--what do we need to spend to accomplish what we need to accomplish?

But you feed off Microsoft and Intel R&D.
Our strategy for development is different than Microsoftis or Intelis. Those are ingredient companies. Weire a computer systems company. We have a higher return on R&D than any other computer systems company, about five times the profit for every R&D dollar spent. A lot of companies say theyire better than us because they spend more on R&D. What are they better at? A lot of the R&D spending is actually spent to protect things that are proprietary, of no benefit to the customer. We only do the kind (of R&D) that benefits the customer. We donit try to reinvent things that other companies have (invented).

What have you done specifically on the R&D side that youire proud of?
Weive made products easier to use and service. Weive innovated in time-to-market. Who had the first color notebook powered by batteries? Itis Dell. Thereis this misnomer that companies that spend more on R&D are somehow better and more successful, but there isnit a lot of data to support that.

If you look at innovation, it doesnit just occur in the lab. Comdex is the place you go to show things that nobody knows what to do with, because they havenit found a market yet. We donit develop things nobody knows what to do with. We develop things people want to buy and buy in volume. Innovation can occur in supply chain and logistics, manufacturing and distribution, and sales and service. Weive made computing products far more affordable. If you look at the cost of computers 20 years ago versus now, weive caused the whole industry to get more efficient.

How do you see your role in terms of design? Would you rather let someone like Apple take the lead?
We spend about as much as Apple in R&D. Just because we sell a whole lot more doesnit mean weire bad. I thought that was part of the objective.

Thereis much more about Dellis operations and goals in the full interview at C|Net.

As for the claim about having the first color notebook, we wanted to make sure we have that covered before anyone incorrectly gets their knickers in a twist. Two years ago, Mr. Dell claimed that his company was the first to integrate 802.11b support in notebooks, even though Dell did so more than 13 months after Apple did it with the iBook (read our full coverage for more information). In our report on the subject we noted the following:

For those keeping score at home, we also checked with both Dell and Apple about who shipped the first color laptop. Mr. Dellis claims that his company was the first with a color laptop are correct. Apple introduced the PowerBook 165c in February of 1993. Dell shipped the 325NC color portable on January 6th, 1992. Thatis a full year ahead of Apple.

In other words, heis right on that one.

Thanks to Observer Sharon for the heads up on the article.

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