Dell admits AI PCs aren't selling as consumer demand falls short of industry expectations

Reviewed byNidhi Govil

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Dell executives revealed at CES 2026 that consumers aren't buying computers based on AI capabilities, marking a dramatic shift from last year's AI-first approach. The company's head of product acknowledged that AI features confuse consumers more than help them, while Dell's COO described AI as an "unmet promise" that hasn't driven expected sales.

Dell Abandons AI-First Marketing as Consumer Demand Disappoints

Dell has publicly acknowledged what many in the PC market have quietly suspected: AI PCs aren't resonating with consumers. At a press briefing ahead of CES 2026, Kevin Terwilliger, Dell's head of product, made a surprisingly candid admission about the company's shift in marketing strategy. "What we've learned over the course of this year, especially from a consumer perspective, is they're not buying based on AI," Terwilliger stated

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. He went further, noting that "AI probably confuses them more than it helps them understand a specific outcome"

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This represents a stark departure from Dell's approach just one year ago, when the company positioned itself as a champion of AI-driven computing. Terwilliger acknowledged this pivot directly: "One thing you'll notice is the message we delivered around our products was not AI-first. So, a bit of a shift from a year ago where we were all about the AI PC"

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. The company has even revived its classic XPS brand, moving away from last year's AI-centric rebranding efforts

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Source: Futurism

Source: Futurism

The Unmet Promise of AI Creates Industry Headwinds

Jeff Clarke, Dell's Vice Chairman and Chief Operating Officer, described the current state of AI in consumer computing as an "unmet promise of AI" during his opening remarks at CES

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. The company had built expectations around AI driving end-user demand, but Clarke admitted "it hasn't quite been what we thought it was going to be a year ago"

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. This assessment carries significant weight coming from one of Microsoft's biggest PC partners, particularly as the software giant continues pushing Microsoft Copilot and Copilot Plus PCs as the future of computing

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Dell was among Microsoft's launch partners for Copilot Plus PCs in 2024, integrating Qualcomm Snapdragon X Elite chips into popular lines like the XPS 13 and Inspiron laptops

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. The company even added Qualcomm's Cloud AI chips to high-end models to boost AI performance for local models. Yet despite these hardware investments, the anticipated consumer enthusiasm failed to materialize. The reality is that most benefits from Copilot Plus PCs stem from improved battery life and performance of Qualcomm Snapdragon X processors rather than AI features alone

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Source: Digit

Source: Digit

Microsoft Faces Mounting Pressure as AI is Not a Selling Point

The timing of Dell's admission creates additional challenges for Microsoft CEO Satya Nadella, who has reportedly become the company's "most influential product manager" in an attempt to address Copilot's shortcomings

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. According to a recent report from The Information, Nadella is acutely aware that the consumer version of Copilot lags behind competitors like Gemini. He has reportedly sent notes directly to product groups with feedback on bugs and shortcomings he noticed in the chatbot

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Microsoft's struggles extend beyond perception issues. The company's flagship Recall AI feature for Copilot Plus PCs launched nearly a year behind schedule after security experts raised concerns

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. This pattern reflects Microsoft's reputation for shipping half-baked products and iterating slowly, an approach that may work for startups but proves problematic for a company of Microsoft's scale

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. Customers develop negative impressions that spread through word-of-mouth even as flaws get fixed, creating lasting reputational damage.

Low AI PC Sales Force Hardware Manufacturers to Adapt

Despite the marketing challenges, every new PC from leading manufacturers this year technically qualifies as an AI PC, equipped with either Qualcomm Snapdragon X processors or new Intel Core Ultra Series 3 or AMD Ryzen AI CPUs

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. While Dell's 2026 lineup includes NPU (Neural Processing Units) in every announced product, the company has deliberately chosen not to lead with AI capabilities in its messaging

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Source: Stuff

Source: Stuff

This strategic recalibration suggests Dell is betting on practical hardware improvements rather than AI buzzwords to drive sales. Clarke noted additional market pressures, including Trump-era tariffs and an anticipated memory shortage in 2026

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. With consumers already spending thousands on capable systems for work or gaming, chatbot acceleration offers little appeal

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The implications extend beyond immediate sales figures. For enterprise customers, where Microsoft generates substantial revenue through bulk licensing, the value proposition remains questionable. It's easy to envision scenarios where business buyers decide against paying an additional $20 per user per month for benefits that haven't materialized

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. Dell's honest assessment may signal broader industry recognition that current AI features deliver more confusion than utility, forcing PC makers to sell hardware "the old-fashioned way" until AI capabilities mature enough to justify their marketing prominence

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