• Dell’s ISG is experimenting with other use cases for cloud computing, but it’s more cost-effective to keep computing close to data.
  • Dell’s ISG addressable market (TAM) total $265 billion, and its revenue is set to grow to about 15% this year, driven in part by sales of AI servers and storage.

OUR TAKE:
Dell’s early AI business is focused on four areas: software development, sales chatbots, customer service, and content creation. This indicates Dell’s favorable market position in the field of artificial intelligence.Dell, meanwhile, expects its ISG revenue to grow about 15 percent this year, driven by sales of AI servers and storage.But Dell sees this as a “lagging indicator” based on demand, underlining its optimistic view of the market.
— Fei WANG, BTW reporter

According to market research firm IDC, the generative AI market will reach $152 billion by 2027, with a compound annual growth rate of 20%. Even that growth, Dell believes, is a “lagging indicator” based on demand.

AI’s influence on Dell’s strategy

The rapid integration of Artificial Intelligence (AI) across various sectors is significantly influencing Dell’s strategic direction, particularly in server and storage solutions. Arthur Lewis, president of Dell ISG, emphasized the pivotal role of AI in retaining a vast majority of data locally, due to considerations around cost, performance, and security policies. Dell’s leadership in the server and storage market is further solidified as businesses transition from testing AI workloads in the cloud to seeking on-premise solutions for AI production. This shift underlines Dell’s strong position in providing the necessary infrastructure for AI applications, which is increasingly recognized by customers looking for efficient, secure, and high-performance AI implementations.

Also read: GenAI explodes cloud service budgets, up 19% YOY to $78 billion

Also read: Cisco introduces AI assistant for enhanced cloud app security

Market growth and Dell’s AI revenue

The potential for market expansion and revenue growth in the AI sector is substantial, with Dell’s total ISG addressable market (TAM) valued at $265 billion and an expected overall market growth of 7%. Dell’s strategic focus on AI server and storage sales is set to propel its ISG revenue growth to about 15% this year. This optimism is supported by IDC’s forecast that the generative AI market will reach $152 billion by 2027, indicating a strong demand trajectory. Dell’s early success in the AI market, highlighted by $1.5 billion in AI server revenue and a $2.9 billion backlog, showcases its ability to cater to diverse industries such as financial services, manufacturing, retail, and healthcare through AI-driven solutions. This positions Dell optimally to leverage the burgeoning opportunities in technology innovation and market demand.