Analyst(s): Olivier Blanchard
Publication Date: August 22, 2025

AI’s potentially transformative impact on the PC segment is still being throttled by an absence of truly disruptive on-device AI functionality. While the hardware itself is impressive and continues to improve at an adequate pace, the overall value of AI PCs in an AI ecosystem that still heavily favors cloud-based AI solutions is beginning to come into question.

Key Points:

• Out of 10 enterprise IT decision-makers (ITDMs), 9 consider AI-enabled PCs (AI PCs for short) the next evolution of PCs.
• For AI PCs to drive growth beyond the Windows 11 refresh cycle, they must deliver demonstrable market disruption, not merely promise it.
• Because most AI-enabled assistants and agentic features remain, by and large, cloud-based, PCs with minimal AI-enabling specs are adequate endpoints for most knowledge workers accessing cloud-based AI-enhanced solutions.
• Without new and compelling on-device AI features that boost both productivity and ROI, and significantly lower TCO, Copilot+ PCs and their higher-performance successors may start to succumb to the downside of the hype cycle that initially made them seem like a good investment.

Overview:

The launch of AI PCs represents a significant evolutionary leap for the personal computer market, promising new AI-enabled capabilities, faster processors, and enhanced efficiency. However, the success of this new category hinges on a key dynamic of technological disruption: a new product must either create entirely new, valuable experiences or make the incumbent technology obsolete. While PC manufacturers are successfully making pre-AI PCs obsolete by prioritizing the shipment of new AI-enabled models, the segment is struggling with its primary value proposition: novel on-device AI experiences – allowing users to access powerful AI features even when a network connection is unavailable.

The Unfulfilled Promise of On-Device AI

The core problem for the AI PC market is a disconnect between AI PC hardware and AI software capable of running locally, on-device. While AI-accelerating hardware in AI PCs is ready to handle local AI workloads, the software ecosystem doesn’t seem interested in providing much of it yet. Perhaps this is not by accident: Today’s most valuable and popular AI features run primarily in the cloud, and can easily be accessed through any PC. The PC functions mainly as a frictionless endpoint, not the processing center. As a result, a PC user’s experience with cloud-based AI is essentially the same whether they are using a new AI PC or a traditional one.

This creates a “utility problem” for the AI PC segment: Unlike the launch of the iPhone, which immediately introduced a new form factor and a host of new use cases, the AI PC has yet to deliver a compelling, “killer app” that showcases the power of on-device AI. Because of this, the primary drivers for AI PC adoption in the enterprise market have been the impending end of support for Windows 10 and the general performance improvements of the new hardware, not demand for the compelling new on-device AI features that the market is still waiting for.

This is a dangerous trend for vendors betting on AI PCs to spark a growth “supercycle” in the otherwise mature PC market. If the AI PC ecosystem fails to deliver high-utility, on-device AI features, the so-called supercycle will merely be another routine PC refresh.

Early Efforts and Vendor Initiatives

Despite the overall struggle, some PC vendors have taken encouraging first steps by integrating on-device AI features into their systems. These features, while not yet at the level of “killer apps,” demonstrate a path forward:

• Lenovo Aura Edition: A suite of features including Smart Modes for privacy and collaboration, Smart Share for file transfers, and Smart Care for on-device technical support.
• HP AI Companion: A collection of tools organized into three categories: Discover (chatbot functionality), Analyze (document summarization and analysis), and Perform (system maintenance via natural language commands).
• Dell: A focus on Collaboration and Productivity (e.g., AI-powered video effects), System Optimization and Security (e.g., Dell Optimizer), and Content Creation (e.g., accelerated generative AI).
• ASUS: Software such as StoryCube for media organization and MuseTree for generative AI demonstrates a focus on creative and organizational tasks.

While valuable, these features don’t yet meet the industry’s high expectations. The on-device AI experiences that the market was promised—such as easily trainable, personalized AI models and local agentic features and less dependence on network access—are still largely missing.

The Way Forward

The AI PC segment faces a critical choice: Software vendors and ISVs must decide whether to continue operating cautiously, keeping valuable AI workloads in the cloud, or to take a risk and launch the on-device “killer apps” that the market was promised.

A risk-averse approach could result in the AI PC refresh cycle becoming just another ordinary refresh cycle, squandering the opportunity to transform the PC market. The alternative is for software vendors and startups to seize the opportunity, fill the leadership void, and deliver the transformative on-device AI experiences users are waiting for. The market is thirsty for these experiences, and the first company to deliver them could achieve a new level of leadership and disruption.

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