Dell is playing a long game, betting that the need for on-premises AI infrastructure will eventually prove compelling enough for enterprises to invest despite the challenges. The company is willing to sacrifice margins in the near-term on GPU servers to help enterprises overcome these barriers. However, it remains to be seen if this strategy will be successful, especially with cloud providers already offering numerous enterprise AI solutions that don't require specific equipment on the customer side.
Key takeaways:
- Dell's earnings report suggests that AI adoption across its enterprise and tier-2 cloud service providers is slower than expected, with the company's stock falling in after-hours trading.
- Dell's AI strategy is based on the presumption that enterprises will need to deploy infrastructure on-premises to take advantage of close proximity to data, a strategy similar to the one used during the Great Cloud Wars.
- Enterprise AI adoption is slow due to customers trying to figure out where and how to apply AI to their business problems, the complexity of AI, and the need for deep domain expertise.
- Dell is playing a long game, betting on the need for on-premises AI infrastructure and helping enterprises overcome barriers to AI adoption, even if it means sacrificing margins in the near-term on GPU servers.