AI gives enterprise device market something to be excited about

Chip makers and PC manufacturers have announced new products to enable AI computing at the individual device level. BRIDGET BENNETT/BLOOMBERG NEWS
Chip makers and PC manufacturers have announced new products to enable AI computing at the individual device level. BRIDGET BENNETT/BLOOMBERG NEWS

Summary

The biggest innovation in years has come for personal computers as manufacturers integrate chips that enable them to run large scale AI models directly on the device. But how quickly chief information officers will want to start snapping up the pricier PCs remains to be seen.

The biggest innovation in years has come for personal computers as manufacturers integrate chips that enable them to run large scale AI models directly on the device. But how quickly chief information officers will want to start snapping up the pricier PCs remains to be seen.

Chip manufacturers including Qualcomm and AMD and PC manufacturers such as Lenovo and Dell over the last year have all announced new products to enable AI computing at the individual device level. They say running AI models on the PC itself—rather than the cloud—will reduce latency, minimize cloud bills, offer greater security and ultimately aid CIOs in deploying AI for use cases such as code generation and content creation.

“The PC space hasn’t seen innovation and any disruption in many years," said Kedar Kondap, Senior Vice President and General Manager of Compute and Gaming at Qualcomm and head of the company’s AI PC business.

But some CIOs remain unconvinced on whether the new devices are worth the cost. Some say they will make the investment first for just technical roles like data scientists. Others say they will make the investment for even regular business users—but only when it’s already time for a refresh in the regular device replacement cycle.

“I’d say it’s rather costly," said Elizabeth Hackenson, CIO of digital automation and energy management company Schneider Electric, adding she would only consider AI-enabled PCs for members of its products group or AI group.

That could change, she added, if the costs come down over time.

Jay Ferro, executive vice president and chief information, technology and product officer at clinical research data-management company Clario, also said he would initially consider the new PCs for roles like data scientists, engineers, or digital content creators.

“Waiting, even a bit, will give us more mature options, avoidance of early adopter costs, greater choice, and more solid case studies," he added. At the same time, “the allure of AI-enhanced PCs is strong."

Dell said its AI-enabled PCs are only marginally more expensive, and pointed to one AI-enabled 14-inch laptop it is selling for $1,339, compared with a non AI-enabled 14-inch laptop it sells for $1,109. Lenovo’s Chief Technology Officer of PCs and Smart Devices Daryl Cromer said while AI-enabled PCs are more expensive, “for the value, it will be very compelling."

Advancements on the software side plus the integration of so-called NPUs, or neural processing units, are what make it practical to run large language models directly on devices rather than the costly cloud setup, manufacturers say. (NPUs aren’t to be confused with the coveted GPU chips powering data centers).

The cost of running AI in the cloud has been notoriously expensive, and the ability to do that computing has been constrained by the limitations of today’s existing physical infrastructure.

With AI PCs, “You get the benefit of security, privacy, immediacy that you get from obviously running stuff on device," said Qualcomm’s Kondap.

To be sure, some large AI models are still too big to actually run on a device, and will likely continue to run on the cloud or a hybrid cloud and on-device setup, he said.

“One advantage of AI PCs would be to eliminate the need to transmit sensitive data to the cloud for processing," said Jason James, CIO of retail software developer Aptos. He added that computing locally could better secure data and reduce the burden on the cloud and time to upload. “While we do not currently have an urgent use case to replace PCs with AI PCs, we will be watching closely," he said.

Enterprise spending on devices, including PCs and mobile phones for workers, plateaued a decade ago, with today’s spending primarily driven by price changes and replacement cycles, said John-David Lovelock, distinguished vice president analyst at Gartner.

Worldwide 2023 enterprise spending on devices was about $184 billion, 11.9% less than the year before in constant currency. Hardware manufacturers are hoping a new wave of AI capabilities could help them change that, Lovelock said, but he is skeptical CIOs are actually keen enough to make big buys outside the regular five-to-six year replacement cycle.

AI-enabled PCs or not, enterprise device spending is expected to increase 4.9% in constant currency to about $190 billion in 2024, according to Gartner. The increase is in part due to the fact that the cycle is coming up for a lot of companies, he said.

This year is approaching four years since the peak buying season that happened during Covid, said Sam Burd, who leads the Client Solutions Group (PCs) at Dell. As CIOs look to make replacements, he said he’s urging them to invest in AI-enabled PCs. Even if they don’t need them this year, they will well before it’s time for the next replacement cycle, he said.

“We don’t want them to have buyers remorse. We want them set up for the future," Burd said.

Write to Isabelle Bousquette at isabelle.bousquette@wsj.com

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