AI PCs Poised for Takeoff in SMB and Midmarket Segments, But Snapdragon Faces Hurdles

A new type of computer is gaining traction: the Artificial Intelligence-powered PC, or AI PC for short.  At Microsoft Build 2024, Microsoft and its leading PC partners, Dell, HP, and Lenovo, unveiled a new class of laptops, Copilot+ PCs, explicitly built for artificial intelligence (AI).  These laptops are powered by powerful Snapdragon® X Plus processors, exceeding 40 trillion operations per second (TOPS), and deliver long-lasting battery life and access to cutting-edge AI models. 

The personal computer market is undergoing a significant shift, and small and medium-sized businesses (SMBs) and upper midmarket companies are paying close attention.  A recent study by Techaisle, covering 1410 SMBs and Midmarket firms in the US, suggests a potential surge in demand for these innovative machines within these business sectors. 

High Awareness Paves the Way for Adoption

The study reveals a high level of awareness and purchase intention among SMBs and midmarket firms, painting a promising picture of the market potential of AI PCs. A significant 77% of SMBs and an impressive 86% of upper midmarket firms are already familiar with AI PCs, demonstrating a high level of awareness and understanding of the potential benefits of AI technology for their productivity and operations. This awareness is not just passive, as the study reveals that a substantial 32% of SMBs and a much higher 64% of midmarket firms are actively planning to purchase AI PCs, indicating a strong market potential and the confidence these businesses have in the technology. This robust purchase intention signals a significant market shift and underscores the potential for widespread adoption in the near future. Moreover, 40% of SMBs are considering evaluating AI PCs before making a purchase decision, hinting at the possibility of even broader adoption in the coming years.

AI PCs are projected to dent the PC market within 3-5 years substantially. SMBs, known for their agility in responding to market trends, will likely mirror this trend. With 54% of SMBs planning to invest in new PCs in the next 12 months, AI PCs could become a decisive factor in purchasing decisions.

The study also uncovers some intriguing insights into SMB priorities. While 14% of SMBs view AI PCs as a crucial upgrade, and another 12% are considering a strategic shift towards them, a substantial portion (24%) see no compelling reason to adopt this new technology. However, 58% of SMBs report that their employees are actively requesting AI PCs. This highlights a potential disparity between management and employees regarding the perceived benefits of AI technology, suggesting the need for better communication and alignment.

The study identifies potential early adopters of AI PCs within the employee base. These are the content creators, tech-savvy departments, and executives in corner offices. Creative and design professionals top the list (45%), followed by IT development (27%) and sales and marketing teams (26%). These departments will likely benefit most from AI PCs' enhanced processing power and AI-powered features.

Copilot Gains Traction, But Snapdragon Faces Recognition Hurdle

The Techaisle study delves deeper, exploring the potential for Copilot, a new software solution designed to unlock the true power of AI PCs. Awareness is high, with over half (54%) of SMBs and a staggering majority (89%) of upper midmarket firms recognizing the name.  Despite its recent launch, nearly half of these businesses already know about Copilot+ PCs.

However, adoption intent dips regarding Copilot+ PCs powered by Qualcomm's Snapdragon processors. This hesitation stems from a few key factors. Limited brand awareness compared to the established giant Intel is a significant hurdle. Concerns about compatibility with existing applications and potential issues with peripherals further dampen enthusiasm. Many SMBs are adopting a wait-and-see approach, holding out for the announcement of Intel-based Copilot+ PCs, hoping these systems will offer similar features and impressive battery life.

Despite the growing hype around AI PCs, the study reveals some interesting realities regarding PC selection criteria for SMBs. While GPU/NPU might be a consideration, it does not reign supreme. For SMBs, the top five priorities when choosing a PC remain long battery life, a processor with built-in security features, ample storage capacity, a high-resolution display, and biometric login options.

Windows Gets a Boost: Copilot+ PCs Launch by Mid-June

Microsoft, along with Dell, HP, and Lenovo, unveiled a new category of PCs at Microsoft Build: Copilot+ PCs. While other manufacturers are offering them under the Copilot+ banner, HP is highlighting the cutting-edge AI features in its own way by calling them "next-gen AI PCs." This approach potentially emphasizes the focus on future-proof technology in their machines.

Copilot+ PCs are designed to prioritize built-in AI features powered by Microsoft's Copilot AI and Qualcomm's Snapdragon X processors. Copilot+ PCs boast impressive specs, including processors capable of 40 trillion operations per second and all-day battery life. This allows them to run new AI features like document editing suggestions, real-time image generation, and language translation directly on the device, also called local inferencing. Local inferencing (AI), also referred to as on-device AI, refers to artificial intelligence processing that happens directly on the device. Cloud AI, on the other hand, leverages the processing power and storage capacity of remote servers to run AI models and applications. However, Copilot+ PCs might still leverage the cloud for specific tasks, such as training or updating AI models. The exact details will likely depend on the capabilities and limitations of the hardware and the software applications designed for Copilot+ PCs. In essence, Copilot+ PCs seem to be taking a hybrid approach, combining the benefits of both local and cloud AI processing to offer a more versatile and user-friendly experience.

Besides those above, several manufacturers are also jumping on board, with various Copilot+ PCs expected to launch by mid-June, starting at $999. This marks a significant shift towards AI-powered PCs and could be a central turning point for Windows machines.

Here are the key details on the Copilot+ PCs launched by Dell, HP, and Lenovo at Microsoft Build 2024:

Dell Inspiron 14 and 14 Plus

• Snapdragon X Plus processor
• 16GB RAM and 1TB SSD storage
• Up to 15 hours of battery life
• Comes with a Copilot key for AI capabilities and features like Recall, Cocreator, Live Captions

Dell Latitude 7455 and 5455

• Snapdragon X Plus processor
• Up to 32GB RAM and 1TB SSD storage
• Up to 21 hours of battery life
• Designed for enterprise/business professionals
• Comes with a Copilot key for AI capabilities and features like Recall, Cocreator, Live Captions

Dell XPS 13

• Snapdragon X Elite processor
• Up to 64GB RAM and 2TB SSD storage
• Up to 27 hours of battery life
• Premium ultra-portable design
• Comes with a Copilot key for AI capabilities and features like Recall, Cocreator, Live Captions

HP OmniBook X (14-inch)

• Snapdragon X Elite processor
• Up to 32GB RAM and 1TB SSD storage
• Up to 26 hours of battery life
• Includes Copilot AI features like Recall, Cocreator, Live Captions

HP EliteBook Ultra X (14-inch)

• Snapdragon X Elite processor
• Up to 32GB RAM and 1TB SSD storage
• Up to 26 hours of battery life
• EliteBook Ultra designed for commercial users with added security and warranty features
• Includes Copilot AI features like Recall, Cocreator, Live Captions

Lenovo Yoga Slim 7x

• Snapdragon X Elite processor
• Up to 32GB RAM and 1TB SSD storage
• Up to 22 hours of battery life
• Comes with Copilot key and AI capabilities

Lenovo ThinkPad T14s Gen 6

• Snapdragon X Elite processor
• Up to 64GB RAM and 1TB SSD storage
• Multi-day battery life
• Comes with Copilot key and AI capabilities

All the above Copilot+ PCs are powered by Qualcomm Snapdragon chips with dedicated NPUs for efficient AI processing. They offer long battery life and unique AI-accelerated features through Microsoft's Copilot platform.

Final Techaisle Take and Recommendations

The Techaisle study vividly depicts AI PC adoption within the SMB and midmarket. With high awareness, strong buying intentions, and growing employee demand for these powerful tools, a significant market shift is on the horizon. While some SMBs might still be cautious, the undeniable benefits of AI technology are acting as a powerful magnet. As AI matures and user concerns are addressed, AI PCs are poised to become the game-changers in business computing, propelling productivity and innovation to new heights. The market seems cautiously optimistic about Copilot+ PCs but hesitant to embrace the Qualcomm-powered versions until some uncertainties are addressed fully.

To compete for market share for new Copilot+ PCs, Dell, HP, and Lenovo should focus on three key areas: educating SMBs and midmarket firms, application compatibility, and battery life.

1. Educate SMBs and Midmarket firms: Many buyers may not understand the potential benefits of AI-powered PCs. Dell, HP, and Lenovo must develop educational resources explaining how Copilot+ PCs can streamline workflows, improve efficiency, and enhance decision-making. They can target industries that can benefit most from AI, such as professional services, healthcare, finance, and manufacturing.
2. Provide Application Compatibility: Not all applications are currently optimized for Snapdragon processors. Dell, HP, and Lenovo should collaborate with software developers to ensure their machines run business-critical applications smoothly. They can provide compatibility checkers to help businesses assess if their current software will run on these new machines.
3. Highlight Battery Life: The extended battery life of Copilot+ PCs is a significant advantage. Dell, HP, and Lenovo should emphasize this feature in their marketing materials to appeal to mobile professionals who need to stay productive on the go. This is a crucial differentiator as battery life is a significant pain point for many laptop users.
4. Offer PCaaS Alternative: SMBs and midmarket firms are poised to embrace Gen AI for growth and efficiency, even quicker than larger firms. However, the high cost of entry could stall this progress. A PC-as-a-Service (PCaaS) model with built-in AI capabilities could be the answer. This subscription approach offers continuous hardware and software upgrades, ensuring SMBs can always access the latest AI features without hefty upfront costs.  Research suggests nearly a third of SMBs would be interested in PCaaS with AI, including deployment, support, security, and consulting, making it a viable solution to unlock the power of Gen AI.