AI PCs: Progress, Potential and Hurdles in Redefining the Market in 2025

2025 Predictions is a series of special reports examining market trends and business changes TBR expects in the coming year for AI PCs, cloud market share, digital transformation, GenAI, ecosystems and alliances, and 6G

Top Predictions for AI PCs in 2025

  1. AI PCs will not drive the next commercial PC refresh cycle
  2. Proprietary AI agents will become increasingly prevalent in the AI PC space over the next several quarters

 

Request Your Free Copy of 2025 AI PC Predictions
 

Revitalizing the PC market

For several quarters during 2022 and 2023, major PC OEMs directed investment from their PC businesses to other ventures as PC sales slowed due to market saturation and cautious spending from commercial organizations. Since late 2023, however, this trend has reversed as PC OEMs invest in the development and marketing of PCs with built-in AI capabilities powered in part by a dedicated processor called a neural processing unit (NPU).
 
While PCs with AI capabilities have existed for years, including high-powered workstations that leverage the GPU for AI tasks such as computer-aided design (CAD) and other simulation workloads, new AI PCs will target a much broader user base, including consumer and business users. This latest influx of AI PCs started in December 2023 with Intel’s release of its Core Ultra series of processors, which offload on-device AI tasks to the NPU in order to deliver greater power efficiency. Since then, PC OEMs have released several waves of AI PCs featuring both the first and second generation of Intel’s Core Ultra chips, as well as similar x86 processors from AMD and comparable ARM-based variants from Qualcomm.

TBR Insights Live: 2025 AI PC Predictions
When OEMs first started releasing AI PCs, they shared expectations that the advent of this new product category would help drive the next major PC refresh cycle. However, even as vendors continue to roll out new generations of AI PCs containing increasingly powerful NPUs, adoption remains relatively slow. This is because the presence of an NPU itself does nothing to increase the value of AI PCs compared to other similar devices, and AI PCs require an additional layer in the form of applicable software that makes AI-enabled features easily accessible and user-friendly.
 
Therefore, to build out the market and drive greater adoption of AI PCs over the next few years, silicon providers, PC OEMs and ISVs will need to collaborate around and invest in developing applications that increase the functionality of these devices beyond what can be achieved by a traditional, non-AI PC.
 
To read the entire 2025 AI PC Predictions special report, request your free copy today!

Cloud Market Share in 2025: GenAI Spurs Growth but Does Not Promise Vendors Long-term Gains

2025 Predictions is a series of special reports examining market trends and business changes TBR expects in the coming year for AI PCs, cloud market share, digital transformation, GenAI, ecosystems and alliances, and 6G

Top Predictions for Cloud Market Share in 2025

  1. Scale, innovation and even repatriation will moderate cloud market growth in 2025
  2. Microsoft will narrow the gap with AWS in IaaS & PaaS market share, en route to leadership in 2027
  3. SaaS vendors will shrug off growing GenAI disillusionment, focusing on the long term by prioritizing GenAI agents within their development strategies

 

Request Your Free Copy of 2025 Cloud Market Share Predictions

The GenAI opportunity is developing but does not ensure future cloud market growth

The revenue generated from generative AI (GenAI) offset some of the impact of cost-saving and expense-reduction efforts that defined the IT and cloud market in 2024. We expect some of that luster to fade in 2025, however, as the lack of a clear ROI from GenAI solutions will be a sticking point that slows investment in the coming year. The long-term GenAI opportunity is still sizable and customer interest remains strong, but the coming year will be a transition period for end customer investment in the technology.
 
TBR Insights Live: 2025 Cloud Market Share Predictions
 
At the same time, the leading hyperscalers will use 2025 to expand delivery capabilities and secure their position in the AI market for the long term. We expect double-digit growth in capex spending from the leading vendors like Amazon Web Services (AWS), Microsoft and Google. This dichotomy of accelerated vendor investment and more restrained customer spending will define the coming year.
 
To read the entire 2025 Cloud Market Share Predictions special report, request your free copy today!

6G’s Fate Depends on the Level of Government Intervention

2025 Predictions is a series of special reports examining market trends and business changes TBR expects in the coming year for AI PCs, cloud market share, digital transformation, GenAI, ecosystems and alliances, and 6G

Top Predictions for 6G in 2025

  1. 6G will leverage FR3 spectrum
  2. Capex spend on 6G is likely to be subdued
  3. Scope of government support for the telecom industry will increase and persist to facilitate 6G market development

 

Request Your Free Copy of 2025 6G Predictions

 

Lack of a clear ROI for the private sector to justify investing sufficiently in 6G puts the fate of the technology into the hands of the government

The telecom industry continues to struggle with realizing new revenue and deriving ROI from 5G, even after five years of market development. TBR continues to see no solution to this persistent challenge and with no catalyst on the horizon to change the situation, communication service providers’ (CSPs) appetite for and scope of investment in 6G will likely be limited.
 
TBR expects CSP capex investment for 6G will be subdued compared with previous cellular network generations, and deployment of the technology will be more tactical in nature, which is a marked deviation from the multihundred-billion-dollar investments in spectrum and infrastructure associated with the nationwide deployments during each of the prior cellular eras.

TBR Insights Live: 2025 6G Predictions

In a longer-term effort to address this situation, TBR expects the level of government involvement in the cellular networks domain (via stimulus, R&D support, purchases of 6G solutions and other market-influencing mechanisms) to significantly increase and broaden, as 6G has been shortlisted as a technology of national strategic importance.
 
With that said, 6G will ultimately happen, and commercial deployment of 6G-branded networks will likely begin in the late 2020s (following the ratification of 3rd Generation Partnership Project [3GPP] Release 21 standards, which is tentatively slated to be complete in 2028). However, it remains to be seen whether 6G will be a brand only or a legitimate set of truly differentiated features and capabilities that bring broad and significant value to CSPs and the global economy.
 
Either way, the scope of CSPs’ challenges is growing, and governments will need to get involved in a much bigger way to ensure their countries continue to innovate and adopt technologies that are deemed strategically important.
 
To read the entire 2025 6G Predictions special report, request your free copy today!

Federal IT Spending Will Remain Robust in FFY25 Amid AI Prioritization

Federal IT in 2025: Sustained growth amid modest budget increases and strategic modernization

Since coming into office, the Biden administration has fueled an unprecedented federal IT bull market. While the White House’s proposed federal civilian technology budget of $75.1 billion for federal fiscal year 2025 (FFY25) is the smallest increase in several years (up less than 1% compared to $74.5 billion in FFY24), it is still an increase of more than 14% from $65.8 billion in FFY23, and up 25% from $60.1 billion in FFY21, the last year of the prior administration.

 

FFY25 has started with a continuing resolution (CR), as have most of the last several fiscal year. The impact of the latest CR on the largest federal systems integrators may be limited to shorter-cycle programs in their order books, but some disruptions to larger, longer-term engagements are not out of the question.

 

Despite uncertainties as a new administration comes into power, overall federal IT spending priorities will remain intact. Digital modernization across civilian, defense and intelligence IT infrastructures must continue. Services provided by civilian agencies must be digitized to enhance citizen engagement and operational efficiency. And IT investment by defense and intelligence agencies must continue expanding in response to global geopolitical instability and the ever-rising challenges from U.S. nation-state rivals.

 

In the civil space, IT decision makers are coming under greater scrutiny to demonstrate how effectively they have invested IT budget windfalls from the last several fiscal cycles. This is partially reflected in overall IT spending growth that will slow in FFY25, at least based on the Biden administration’s initial FFY25 budget request.

 

For example, the U.S. Department of Health and Human Services’ budget is expected to decline by $100 million (or 1%) in FFY25 compared to FFY24. IT budgets at some agencies, such as the Department of Education will be flat in FFY25 but will expand at a handful of agencies like the Department of Homeland Security in FFY25.

 

The Defense Appropriations Act for FFY25 provides $852.2 billion in total funding, a 3.3% increase compared to FFY24. The Biden administration ceased providing greater detail on Department of Defense (DOD) IT outlays early in its term, but TBR assumes defense IT spending will increase in concert with the growth in overall defense outlays and will continue centering on using data to enhance warfighting and intelligence operations, modernizing the Pentagon’s underlying IT infrastructure, and achieving interoperability across service branches and with the defense agencies of U.S. allies.

 

Defense agencies will also ramp up investment on solutions that push data capture and analysis ever further out to the tactical edge. National security will continue to be a bipartisan matter as the global threat environment remains elevated. The total addressable market for federal systems integrators (FSIs) with a presence in the defense and intelligence sectors could be worth at least $200 billion, and potentially $300 billion or more, with a large and growing portion of the market opportunity tied to AI.

 

Technologies like quantum computing and space-based IT architectures have also been deemed critical by the U.S. defense and intelligence communities, and investment is accelerating in these areas. Additionally, AI currently retains a high strategic priority among emerging digital technologies.

 

AI investments across all federal sectors have accelerated as agencies recognize AI’s potential to optimize agency operations and enhance mission-critical agency functions. AI solutions enable DOD and intelligence community (IC) agencies to process high volumes of data, and subsequently generate actionable insights to warfighters and combat commands, as well as to intelligence operators in the field.

 

Federal agencies must also master AI from both a technological and a responsible use standpoint, prior to the inevitable adoption of generative AI (GenAI). The most basic, fundamental distinction between AI and GenAI is that AI is good at analyzing existing content while GenAI generates new content. Much foundational modernization work is still needed across the federal IT environment to accommodate digital technologies like cloud, AI and GenAI, ensuring continued (albeit slower) federal IT growth in FFY25 and beyond.

State of the Federal IT Market: Continue Opportunities Amid Slowing Growth — Watch On Demand Now!

GenAI will continue to revolutionize mission-critical functions and day-to-day operators at federal civilian, defense and intelligence agencies

The business case for GenAI streamlining human-resource-intensive, mission-essential operational tasks is indisputable. Even early GenAI use cases have demonstrated the potential of GenAI for federal agencies. Early AI pilots focused on automating repetitive duties to maximize efficiencies in federal agency workflows, but the scope is expanding to focus on the potential for AI to transform more mission-critical activities.

 

In addition to streamlining operations vis-à-vis AI, DOD and IC agencies are also implementing AI technologies to make sense of the enormous volume of data being generated by networks of satellite and C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance) systems and provide actionable intelligence to warfighters, military commands and other national security personnel deployed globally.

 

As a result, TBR expects that AI prototyping initiatives will accelerate in FFY25 and that more pilot projects than ever will convert to formal AI implementation initiatives in FFY25.

FSI-operated, AI-focused CoEs and innovation centers will proliferate across federal IT in FFY25

Federal agencies want to see AI in action, but FSIs must clearly demonstrate the potential ROI of AI to risk-averse agency IT decision makers. The FSIs most proactively managing their alliance ecosystems will take their relationships with commercially focused technology peers to the next level.

 

Like its parent company in commercial markets, Accenture Federal Services (AFS) has actively stood up new showcasing centers in federal IT. AFS’ collaboration with Google Public Sector has been particularly prolific as of late. In 4Q24, AFS and Google Public Sector’s Rapid Innovation Team (RIT) launched the Federal AI Solution Factory to accelerate the development and deployment of AI-powered solutions for federal agencies.

 

The new facility comes on the heels of AFS and Google Public Sector launching a new center of excellence (CoE) in 2Q24 to showcase how GenAI technologies can improve citizen services across federal agencies, following AFS and Google Public Sector teaming to stand up a new Cybersecurity CoE in 4Q23.

AI-related budget outlays in civil agencies will surge in 2025

AI is enhancing the citizen experience by automating human-resource-intensive tasks and enabling civilian agencies to respond proactively, not reactively, to security or operational challenges.

 

Civilian agencies are demanding AI technologies that maximize organizational efficiencies, knowledge management and security and that facilitate digital transformation of monolithic IT systems.

 

According to TBR’s 3Q24 CACI report, “The federal government allocated $3.3 billion for artificial intelligence (AI) in the FFY25 budget request, although TBR believes there is a large volume of undisclosed AI-related spending in the FFY25 budget earmarked for the classified arena in the DOD and IC, and federal law enforcement agencies. Beyond the $3.3 billion allocated for AI in the FFY25 budget, Congress is currently considering a proposal to spend over $30 billion on ‘AI innovation projects’ across civilian agencies, the first such effort fund large-scale AI adoption in the civil space. The bipartisan nature of the proposal certainly reflects how AI is increasingly being prioritized across the federal IT market.”

 

Civilian agencies will increasingly leverage AI in FFY25 to improve citizen-facing services, achieve regulatory compliance more efficiently, optimize operational workflows, and enhance workforce recruiting and retraining.

HCLTech AI Force: Scalable, Modular and Backed by Proven AI Expertise

TBR perspective

Disparate and siloed data, specialized software tools and interrelated processes challenge enterprises to gain real value from AI-enabled solutions. HCLTech’s AI Force platform provides visibility into data streams and interdependencies across the software development and operations life cycles — requiring minimal change management but no replacement of existing technology and greatly enhancing an enterprise’s existing IT environment. In short, AI Force is a nondisruptive force multiplier of customers’ technology investments.

 

In late September, TBR met with executives from HCLTech to discuss the company’s AI Force platform, overall business model, and strategies around AI and generative AI (GenAI). The HCLTech team included Apoorv Iyer, EVP and Global Lead, Generative AI Practice; Gopal Ratnam, Vice President, Product Management, Generative AI Products & Platforms; Alan Flower, EVP and Global Head, AI & Cloud Native Labs; and Rohan Kurian Varghese, Senior Vice President, Marketing. This special report reflects that discussion as well as TBR’s ongoing research on and analysis of HCLTech.

AI Force is a GenAI-powered platform that infuses intelligence across every phase of the dev and ops life cycles

HCLTech had an early start in AI, setting up a research team in 2016 and building out its AI engineering strengths around AI silicon; the development of AI-led IP solutions like DRYiCE, iAutomate and SDLC (Software Development Life Cycle), which was a precursor to AI Force; and its strong heritage in Data & AI with strategic acquisition like Actian, Starschema and, most recently, Zeenea. This has ingrained AI across HCLTech’s portfolio and underpinned transformation projects, allowing customers to seamlessly manage IT and cloud environments. Leveraging this heritage, HCLTech developed AI Force with responsible AI spanning built-in use cases that are scalable and modular and cover the entire software and operations life cycle, such as requirements and analysis (e.g., user story generation, change impact analysis), development (e.g., code generation, code refactoring), triage (e.g., duplicate defect detection), and technical support.

 

Through AI Force, HCLTech provides clients with a platform that supports not only software development life cycle, reducing the lift on manual tasks and shortening overall development time, but also the operations life cycle, enhancing overall efficiency and accelerating technology value across an enterprise by reducing accrued technical debt and producing better quality code. As one HCLTech leader described it, AI Force allows an enterprise to “stitch everything [in the IT environment] together and figure out where the issues are.”

 

Notably, AI Force has been on the market for over a year, is live with more than 25 of HCLTech’s enterprise clients, and serves the broader IT ecosystem within an enterprise, beyond just application development and maintenance teams. An HCLTech leader noted that the AI Force platform “reduces the lift of manual tasks and accelerates the overall service delivery time,” a clear operational and financial benefit for any enterprise and clearly more than simply a collection of software tools. Enterprises can now take intelligent decisions by harnessing data, leading to the accelerated development of products and applications, along with significant cost savings and improved efficiencies.

 

Before diving into specifics around AI Force, HCLTech’s leaders described some of the challenges enterprises face across the software development and operations life cycles, highlighting the complexities inherent in having multiple personas, disconnected processes, siloed data, disparate systems and specialized tools.

 

According to HCLTech, this landscape is missing a digital thread or intelligence hub capable of understanding the entire process end to end, including the data sets generated by specialized tools, and then further unlocking the relationships between the data sets. HCLTech’s AI Force can integrate existing tools not replace them and bring data sets together, create a knowledge graph of the relationships between the data sets, and conduct comprehensive root cause analysis.

AI Force’s key characteristics and advantages

In the discussion with TBR and during HCLTech’s presentation of AI Force’s capabilities, HCLTech’s AI leaders walked through AI Force’s go-to-market approach, characteristics, architecture, advantages and use cases. HCLTech conducted a demonstration of AI Force in action before turning to the synergies between AI Force and the company’s global network of AI and Cloud Labs.

 

At its core, HCLTech’s AI Force features extensibility, modularity and flexibility. It can integrate smoothly with existing IT environments, be leveraged for a large variety of use cases within an enterprise, and be deployed, consumed and priced in different ways that are suitable to an individual customer’s business needs.

 

In describing HCLTech’s go-to-market strategy, the AI leaders stressed three points:

  1. HCLTech will continue to enhance large-scale engagements with the capabilities and benefits of AI Force from the start, affording the client immediate cost savings.
  2. In other situations, HCLTech will assist clients in deploying AI Force as a platform within the client’s enterprise IT environment.
  3. For clients already engaging HCLTech for managed IT services, AI Force can be deployed to gain cost savings and efficiencies, directly complementing existing managed services. This last approach, in TBR’s view, reinforces HCLTech’s value proposition around offering innovation, even in established managed services engagements, and expands its remit within the enterprise, from simply IT services to more consultative, business-outcomes-driven and AI-enabled solutions. As part of this consultative approach, HCLTech undertakes value stream mapping in the discovery process for deploying AI Force, including a detailed as-is picture, to-be picture, and the true impact at scale. Through this due diligence, HCLTech helps customers select the right projects that can benefit from AI Force.

Appealing broadly across the enterprise and embedding customer context

Recognizing that peers such as Infosys and EY have similarly developed suites of AI-enabled and AI-forward solutions, HCLTech leaders highlighted some aspects they believe distinguish the company’s capabilities, particularly AI Force.

 

First, the solution can be deployed on the cloud, on premises or even in edge-enabled devices, depending on a client’s needs and circumstances. The leaders described this aspect as appealing to HCLTech’s ecosystem partners, which include Microsoft, Amazon Web Services (AWS), SAP and IBM, further noting the already established integration with Microsoft’s GitHub Copilot and being offered as a certified extension.

 

Second, the HCLTech executives noted AI Force is valuable to more than just coders and enterprise professionals looking for AI-enabled cost- and time-saving assistance. Being extensible and working with multiple large language models (LLMs) made AI Force flexible enough for a broader enterprise workforce audience.

 

Third, the inclusion of a customer context using enterprise data makes the solution more than simply an addition to an existing LLM accelerator. HCLTech’s leaders emphasized the value of customer context inherent to the platform, noting that HCLTech will train AI models on customer-specific data.

 

On a related note, the HCLTech executives described the underlying AI architecture as “comprehensive, but not complex; unified” and “holistic, therefore not a point solution.” According to HCLTech, AI Force has been granted 18 patents, and its batch processing mode reduces the strain on the underlying cognitive infrastructure, leading to reduced energy consumption. In TBR’s view, the characteristics and architecture likely resonate with IT professionals and particularly software engineers, while the flexibility and customer context significantly enhance the business value of AI Force.

 

Building on key characteristics, the HCLTech AI leaders walked through AI Force’s overall advantages, including a single, unified platform, rather than hundreds of solutions; simplified management and budget; built-in use case prioritization, allowing decision-makers and IT support to focus on the use cases that would lead to business transformation; inherently enabled customer context, greatly enhancing the stickiness of AI Force within an enterprise; and built-in data ingestion and storage, significantly diminishing the likelihood of disjointed or counteracting results.

 

In TBR’s view, AI Force’s advantages play well for different buying and decision-making personas. Procurement, IT operations and even the CFO can appreciate a single solution with simplified management. Business unit leaders can find and deploy uses cases suitable to their specific needs. And the inherent stickiness of AI Force can appeal to executives looking to gain advantages from deploying AI-enhanced solutions and not simply paying for another round of new technologies.

Applying GenAI only when and where it is needed

Not every business problem is best solved by deploying GenAI-enabled solutions. HCLTech leaders emphasized that some customer problems can be handled by simple automation, some with traditional AI, and only a niche set through GenAI-enabled solutions.

 

In TBR’s view, HCLTech’s strategic decision to recognize that customers can solve problems with existing technologies and do not always need GenAI-enabled solutions plays well, given enterprise buyers’ fatigue around the constant carousel of emerging technologies and ever-increasing IT budgets. Simply showing customers that AI Force will help identify where GenAI is best suited and where it is not should resonate with IT decision makers and their C-Suite bosses, all of whom are looking for tangible returns on technology investments. If HCLTech can help get more from existing technologies, AI Force is an immediate value-add.

 
Notably, HCLTech works with a wide variety of models and is model agnostic. The choice of model depends on a client’s business problem and the context of the client’s own data. Rather than recommending a model based on technical specifications or a familiarity with a particular model, HCLTech centers the decision on the client’s specific business problem.

Four ways to consume, determined by the customer’s business problem

HCLTech’s customers can take advantage of the AI Force platform in whichever deployment and consumption model fits their needs. HCLTech offer the platform as a stand-alone deployment, embedded into the client’s IT environment, through APIs (which one HCLTech leader described as “headless … behind the scenes”), or on the edge through AI-enabled PCs.

 

Critically, HCLTech leaders assured TBR that the customer’s consumption model of choice made “no difference in how the customer pays for AI Force.” As for decision making around the consumption model, HCLTech leaders said the company advises customers based on the business problem the customer is trying to solve.

 

On this point, TBR believes HCLTech has, itself, made a strategic decision: allow the customer’s environment, needs and business problems to determine the best commercial and technological fit for HCLTech’s platform, rather than HCLTech’s business and commercial needs dictating deployment terms.

 

The discussion included detailed accounts of two deployments at different types of companies. First, to accelerate a legacy IT modernization effort at a financial institution, HCLTech used AI Force to map, migrate and test more than 200 legacy applications.

 

Second, at a massive global technology company, HCLTech used AI Force to radically reduce marketing spend through a what an HCLTech leader referred to as “marketing ops transformation from manual-driven content development by a third-party vendor to GenAI-automated content generation.” TBR has been briefed on similar marketing operations improvements through GenAI automation, but none at the same scale or with comparable cost savings as those described by HCLTech.

 

HCLTech leaders also described the company’s recently announced partnership extension with Xerox. The company will leverage automation, product and sustenance engineering, and process operations services — including order to cash, sales and marketing operations, and supply chain and procurement — along with AI Force, to deliver a unified interface that transforms the way employees and clients engage with Xerox.

 

HCLTech describes other AI Force use cases on its website.

Minimal change management and increased visibility provide immediate value

In TBR’s research, GenAI adoption has benefited enterprises with well-managed and orchestrated data, even if that data exists in silos. In contrast, enterprises with little visibility into their data have been challenged to see meaningful returns on their GenAI investments, in part because of a challenge HCLTech identified above: People within an enterprise typically like the specialized software tools they are already using and want to keep using them.

 

HCLTech’s AI Force does not ask for change from multiple personas across an enterprise or for adoption of a new set of tools; it instead provides greater visibility into everyone’s processes, software usage and IT environment and demonstrates how one person, process or tool can affect another. By providing visibility without demanding replacement and adoption, HCLTech’s AI Force can deliver value with minimal change management.

AI Force may be what helps HCLTech survive the coming IT services business model upheaval

As HCLTech’s leaders noted to TBR, HCLTech is not new to AI, as the company had been investing in AI, training its workforce around AI principles and deployments, working with chip manufactures, and developing and selling software all before GenAI emerged. As one slide in HCLTech’s presentation noted, the company has been “Building and deploying AI solutions since 2016.”

 

Legacy — and maybe more accurately, proven — skills and capabilities lend immediate credibility to what HCLTech brings to clients and partners with AI Force. Further, a significant part of what separates HCLTech from immediate peers is the company’s IP-driven services model, a strategic difference that becomes increasingly relevant as clients ask for more GenAI-enabled services and less labor-dependent services. HCLTech’s business model is not simply enhanced by AI Force and other IP-driven solutions; it might actually be saved by those capabilities as the entire IT services business model undergoes significant, AI-induced change.

 

TBR will be watching as HCLTech develops additional platforms, brings agentic AI solutions to discussions with clients, and enables fully autonomous AI deployments, all built on a solid foundation of expertise, experience and ever-increasing capabilities around artificial intelligence.