The PC industry—and here I mean not just the personal-computer makers but also the chip and software companies that drive them—think they’ve found a golden ticket in generative artificial intelligence. They aren’t just excited about the notion of AI PCs, they are positively ecstatic about the possibility that having laptops that can run large language models will turn around the fortunes of the industry after an eight-quarter run of declining year-over-year unit sales.
Intel,
in particular, is all-in on this idea. Back in September, CEO Pat Gelsinger declared at a developer event in San Jose that the ability to run AI workloads on PCs will be “a sea change moment” for the technology sector. At a largely news-free press conference at the CES trade show in Las Vegas late Monday afternoon, Intel doubled down, making the case that AI is going to change everything for the PC industry. While there were no pompoms in evidence, it had the feel of an AI PC pep rally.
Now, the good news for the PC industry is that other factors should drive up unit demand in 2024, no matter what happens to AI PCs. The market research firm Canalys has projected 8% growth in PC unit sales in 2024. Many pandemic-era laptops are aging and will need to be replaced, and
Microsoft’s
coming 2025 termination of support for Windows 10 is expected to drive a flurry of upgrade activity among corporate customers in 2024 and beyond.
But the PC industry wants more than incremental growth. The companies see AI PCs as a once-in-a-lifetime opportunity to resuscitate growth in a highly mature business. Canalys, for one, thinks AI PCs will account for 19% of units this year, reaching 53% of unit sales in 2026.
“AI is everywhere, transforming, reshaping and reimagining the PC experience,” Michelle Johnston Holthaus, the general manager of Intel’s client computing group, told a room of several hundred reporters in a packed conference room at the Venetian hotel.
Intel held a panel at the event that included senior executives from
Lenovo,
HP Inc.,
Dell,
and
Microsoft,
all of whom gushed about how adding AI capability to PCs was going to boost sales and even improve average selling prices. In short, they all see AI PCs as a clear route to reviving the flagging financial fortunes of the personal-computer industry.
Luca Rossi, president of the intelligent devices group at
Lenovo,
asserted that the ability of AI PCs to run large language models on the edge of the network will provide higher levels of privacy and security and reduce latency when compared to cloud-based AI models. “We are confident it will trigger acceleration of the replacement cycle,” Rossi said, with “modest expansion” of the addressable market.
“It will be a computing revolution,” chimed in Alex Cho, who runs HP Inc.’s Personal Systems Group. “A human-computer interface revelation … we’re going to party like it’s 1999.” (That’s a nice Prince reference, except that for the tech industry 1999 was followed two years later by the 2001 tech meltdown. Be careful what you wish for).
Sam Burd, president of
Dell’s
Client Solutions Group, said we are “truly at an inflection point in the industry.” His view is that AI will give people an excuse to upgrade their PCs. “People are going to love their PCs with AI built in.”
Microsoft corporate vice president for Windows and Devices, Pavan Davuluri, asserted that the company’s AI-powered Copilot software is “transforming the PC experience.” And that is literally true—the company last week said it was going to require PC makers to include a Copilot button on their keyboards. “This is just the beginning,” Davuluri said. “It’s shaping up to be an amazing year for us.”
The only problem with all of this is that it isn’t entirely clear what consumers or for that matter corporate customers actually will do with their AI-powered PCs. Intel’s Holthaus said in an interview with Barron’s that the situation is analogous to the early days of the iPhone. “No one knew what was going to happen,” she said. “I don’t think there’s a killer app.” Rather, she thinks there will be compelling apps for every audience, both consumers and enterprises.
HP’s Cho told Barron’s that he sees multiple emerging applications, including AI-driven summarization, and locally run image generation apps. Said Cho: “It’s an experience revolution.”
The risk for the PC industry is that while the technology evolves, nothing really changes. That’s effectively what’s happened with 5G mobile wireless networks. When mobile carriers were first rolling out 5G, there was a widespread view that it would spur creation of a wide range of new applications and experiences. And yet, while 5G is faster, and provides expanded bandwidth and lower latency than 4G, it’s hard to identify many ways in which it has changes the lives of consumers. In order to drive an AI PC revolution, tech players are going to have to come up with some better answers on why we’re going to all upgrade to the next big thing.
Write to Eric J. Savitz at eric.savitz@barrons.com
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