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Microsoft's latest foray into AI-powered computing has seen its average distributor sale price drop by about 10 percent, but premium pricing remains a concern for potential buyers.
The average distributor sale price of Microsoft's Copilot+ PCs dropped by about 10% in November compared to October.Analysts warn that the premium pricing is still deterring many potential buyers, with some suggesting that vendors need to better communicate the value proposition.Copilot+ PCs are lagging behind expectations, with an adoption rate of only 32% in Q4 2024.The European PC market has shown modest growth, but the US market is facing challenges due to tariffs imposed by the incoming President-elect Trump.Microsoft's efforts to build applications for Copilot+ PCs are ongoing, but it remains to be seen whether this will boost adoption rates.Analysts forecast that adoption rates for pure AI PCs will increase as availability increases and next-generation products are rolled out.
Microsoft's latest foray into the world of artificial intelligence (AI) has been met with a mix of excitement and disappointment. The company's Copilot+ PC initiative, which aims to bring AI-powered computing capabilities to mainstream consumers, has seen its average distributor sale price drop by about 10 percent in November compared to October, according to market intelligence firm Context.
While this might seem like a positive trend at first glance, analysts warn that the premium pricing of these devices is still deterring many potential buyers. According to Context Senior Analyst Marie-Christine Pygott, "The value proposition of these devices still needs to be communicated more effectively to users." Pygott's comments highlight the ongoing challenge of convincing consumers about the benefits of AI-powered computing.
Despite the modest growth in European PC sales in general during the final quarter of 2024, Copilot+ PCs are lagging behind expectations. The adoption rate of AI-capable laptops rose to 32 percent during the quarter, up from the 22 percent observed during Q3, but the share of Copilot+ PCs within this segment increased only by a marginal 2 percentage points.
Context shares Intel's definition of an AI-capable PC as one featuring a processor with a built-in neural processing unit (NPU) to accelerate certain AI operations. The Copilot+ PC is Microsoft's branding for systems with an NPU that performs at 40 TOPS or more, where TOPS is one measurement of AI performance.
However, not all analysts are optimistic about the prospects of these devices. Gartner research director Ranjit Atwal expressed concerns that the premium pricing of AI PCs is "going to have to give" in 2025, and warned that vendors are pushing AI PCs with a premium price tag without providing clear value proposition.
The European PC market has shown modest growth during Q4, with revenue for December up 7 percent compared to last year. However, the US market is also facing challenges due to concerns over tariffs imposed by the incoming President-elect Trump on technology made in China. These tariffs could bump up the price of a laptop for American buyers by an estimated 68 percent.
Microsoft has pumped billions into AI development and is working with a network of software vendors to build applications that will use the NPU circuitry, in an attempt to sway buyers. However, it remains to be seen whether this effort will be enough to boost adoption rates of Copilot+ PCs.
Pygott forecast that for "pure" AI PCs, adoption will go up as availability increases and next-generation products are rolled out. However, she warned that Copilot+ PCs are "a bit different." These devices are currently in the premium price range, but their value add is not always clear to users. Pygott believes that this will change as it becomes clearer to users what these PCs can do, and how the way they use a PC will change with AI.
In terms of market share, Apple's systems based on its "M" chips lead in Europe and the UK, while vendors such as Lenovo and HP have recently gained a lot of share, and Microsoft's Surface is the top product among Copilot+ PCs. However, Pygott cautioned that this is based on distributor sell-through data rather than retail sales.
In conclusion, while Microsoft's Copilot+ PC initiative shows promise, it still faces significant challenges related to premium pricing and lack of clear value proposition. As the concept matures and awareness grows, analysts expect adoption rates to increase in 2025.
Related Information:
https://go.theregister.com/feed/www.theregister.com/2025/01/14/ai_pcs_europe_sales/
Published: Tue Jan 14 10:56:49 2025 by llama3.2 3B Q4_K_M
