The emergence of AI-powered PCs might lead to a fundamental shift in the computer market. With special chips for AI applications local data processing – moving away from the cloud – becomes feasible, offering privacy advantages and energy savings. The question however remains whether this will truly reinvigorate the PC market. While some believe in a revolution, others point to the possibility of a marketing hype.

At the start of the new millennium the gaming PC was the new hype. It boosted the market and brought a PC to consumers that was distinctive because of its graphic computing power, its powerful processor, in combination with sufficient RAM memory, one or more fast video cards and a strong power supply. The question now is whether the AI-powered PC can do the same for the IT market. As we have pointed out in an earlier article, there is a growing number of workstations, computers, thin clients and laptops that are being specifically designed for heavy graphic design work or gaming. This raises the question whether there will be a PC completely focused on AI functionalities. How will this transform the IT market and what are the consequences for the global IT sector? Will there be room for new specialised players on the market?

Are we moving towards the emergence a new type of PC?

Since the corona pandemic, PC sales have been in a bit of a slump, partly due to the fact that computers last much longer than they used to. As a consequence, there is no longer an immediate need to upgrade computers, which applies to both individual users and businesses. For vendors this is a challenge, and the AI PC might be an attractive new niche that might give a new boost to the market. Several experts, such as Canalys, predict an improvement in the IT market in 2024, partly as a result of the inclusion of AI features in PCs. AI compatible PCs are devices that integrate AI in personal computers, enabled by the swift emergence of specialized AI chipsets, which are becoming essential for improving both productivity and the leisure experience on PCs.

AI compatible PCs are enabled by specialized AI chipsets

Anticipating on the emergence of AI, chip and laptop manufacturers are eager to convince users that PCs must be AI capable. As a consequence, many chip designers are ready to explore the propositions of the AI PC. Both AMD and Intel are putting an AI accelerator (or NPU) on their processors that can adjust AI workloads. This means that workloads are not performed by CPU cores themselves, but by an optimized chip that processes AI workloads much faster and much more efficiently. This leaves the CPU free to perform other, more appropriate tasks.

A promising future for Arm-based PCs

In this rapidly evolving PC landscape, Apple and Qualcomm take the lead with advanced Arm-based processors, paving the way for AI integration. Arm-powered devices might be promising because the power-frugal nature of the Arm architecture enables these devices to offer a longer battery life while delivering great performance. Moreover, Arm Systems on Chip (SoC) often include other key features, such as a powerful CPU, GPU, Wi-Fi & mobile data networks, as well as Neural Processor Units (NPUs) for accelerating AI workloads. Arm processors offer superior energy efficiency and heat management, which is crucial for AI applications. However, many challenges still persist in this market, such as Intel’s dominance and the cautious acceptance of the AI-PC by channel partners. Despite this, Canalys predicts a shift towards emerging technologies and increased competition. While competition from Qualcomm and AMD in AI processors, as well as Apple’s integration process, pose challenges for Intel, there remains significant reliance on Intel processors and architecture within the IT market, which creates a barrier for other players. At the same time, Intel is under considerable pressure and recently announced a round of layoffs and significant budget cuts following a billion-dollar loss in the last quarter. It remains to be seen to what extent this will shake up the dynamics within the IT market over time and create more opportunities for other players.

Further market diversification and a growing interest in Arm technology nevertheless suggests a promising future for Arm-based PCs. The AI-driven PC offers a new dimension of user convenience and efficiency. While the prospect is promising, it also raises questions about transparency and a too strong reliance on AI. Maintaining clear communication and control remains essential as the user experience evolves. Intel emphasizes the importance of keeping user data within the system, enhancing practical applications of AI. A uniform ecosystem and engagement from app developers will be crucial for realizing this visionary concept.

AI-driven PCs will offer a new dimension of user convenience and efficiency

Is AI moving away from the cloud?

Currently, AI algorithms are typically processed in the cloud, on large servers. But there is a growing number of users that want to run those algorithms on their local devices, such as on laptops and smartphones. On smartphones, they are already being used for face recognition, for example. On PCs, in turn, the emphasis would be on applications such as text generation. Traditional computer chips are not suitable for this, which opens the door for the development of dedicated chips for AI.

HP’s ambition to run AI locally on PCs might open the door for a paradigm shift in technology, according to HP CEO Enrique Lores in an interview with CNBC. “There will be new PCs and experiences. Until today, everything around AI happens in the cloud. That will change next year when we will see these capabilities on our PCs,” Lores said. He expects the first AI PCs to hit the market in the second half of 2024.

The next big thing’ or simply an evolution of processor technology?

The shift from hardware to the cloud and back to hardware might represent an interesting new trend. Moving away from the cloud not only reduces dependence on constant internet connections but also offers benefits like lower energy costs and enhanced privacy, as sensitive data is not sent to external servers. Additionally, this local approach can improve processing speed, resulting in faster and more efficient performance. An example of this is Apple’s Neural Engine, a dedicated processor optimized for machine learning tasks such as facial recognition. This processor not only provides significant performance boosts but also delivers a more efficient and energy-saving execution of complex tasks. This is crucial for devices like the iPhone and Apple Watch, where battery life and processing power are limited. Intel’s Meteor Lake and Google’s Tensor chip are also examples of specialized hardware for AI. It’s clear that the focus is gradually shifting towards optimizing AI tasks in a way that is less reliant on large-scale cloud infrastructures. However, questions remain regarding its implementation. Will this be done via CPU, GPU, or a separate AI accelerator?

Whether AI PCs can really lift the computer market is uncertain. It remains to be seen whether users will need to buy a new computer that is ‘AI capable’. Particularly as computer manufacturers may claim AI PCs will be the next big thing, but in the end, this may just be a new generation of processors for PCs. In time, though, more specialized models with useful features that can run locally will appear that no doubt trickle down to the general public. Moreover, for companies’ PCs that are equipped with AI technology can improve their business performance and productivity by automating processes or tasks that previously required human effort. In addition, AI makes it possible to interpret data on a scale that no human could ever handle. Time will tell whether AI-powered PCs indeed become the promised ‘next big thing’ or simply an evolution of processor technology.

Flex IT’s vision towards circular AI capable PCs

Flex IT believes that the emergence of AI-specialised PCs represents a new and distinct category in the computer market, fundamentally shifting how computing power is utilised. These PCs handle complex AI tasks locally, enhancing data privacy and security and addressing customer concerns about data sovereignty.

Flex IT believes that AI-specialised PCs mark the emergence of a new type of PC in the market

Although Flex IT expects that the demand for new PCs will increase in the coming years with the rise of AI-capable PCs, the need for circular equipment will remain equally strong. Sustainability requirements and financial benefits will continue to drive the demand for circular IT devices. Moreover, the demand for new AI-capable devices will also trigger replacement demand. As a result, the ITAD industry will see an influx of devices into the refurbishment cycle and electronic waste will be reduced. One of the big challenges in the refurbishment industry is the lack of appropriate supply and this should be partially resolved through the boost in product replacements. Sustainability requirements and financial benefits will continue to drive significantly higher demand for circular IT devices. The replacement cycle driven by AI-capable PCs will help address the supply challenges around refurbished devices.

Early adopters

Flex IT believes that AI-specialized PCs offer significant opportunities for the IT market. They mark the emergence of a new type of PC, distinct in its capabilities and designed to meet the demands of modern computing. Simultaneously, we expect that the introduction of AI features will boost the PC market by increasing demand and offering new functionalities for both businesses and consumers. Early adopters will embrace and work with AI-capable devices, while a significant number of users may not require or directly benefit from the technological advancements these devices offer. The functionality and speed of processors and chips from the last 3-4 years will continue to be more than sufficient for their workplace needs.

This evolution not only drives innovation but also aligns with Flex IT’s sustainability ambitions. We expect that within the next two years, the first refurbished AI-capable PCs will be available on the market. Moreover, Flex IT Rent intends to start renting AI-specialized IT hardware. For example, Apple’s M3 models are already part of our rental portfolio, with more products to follow in the coming periods. In this way, Flex IT is taking significant steps forward to ensure that the benefits of AI are accessible across the entire sector.