Making Dell AI Factory Real – Six Five On The Road at Dell Technologies World

By Patrick Moorhead - May 23, 2024

On this episode of the Six Five On The Road, hosts Patrick Moorhead and Daniel Newman are joined by Dell‘s Sam Grocott, Senior Vice President Product Marketing for a conversation on the innovative approach of Dell in the realm of Artificial Intelligence with the Dell AI Factory. Our hosts, Patrick Moorhead and Daniel Newman, delve into an enlightening discussion on the strategic insights and technological advancements that underpin the Dell AI Factory initiative.

Their discussion covers:

  • Debating the merits and drawbacks of building AI Factories in public clouds versus on-premises environments.
  • An in-depth look into what the Dell AI Factory is.
  • Exploring the components that make up the Dell AI Factory.
  • The unique value proposition of choosing Dell over other technology partners for building AI factories.

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Patrick Moorhead: The Six Five is On The Road at Dell Technologies World 2024, here in tech analyst favorite land, Las Vegas. Dan, it has been an incredible event so far. It’s infrastructure, AI, it’s software, it’s services, it’s customers and big partners, Nvidia and ServiceNow on stage with Michael Dell.

Daniel Newman: Yeah, it was a big keynote. The event had a ton of momentum. You could see the audience was really engaged. And of course you mentioned all the infrastructure and the big data center stuff, which we’ll be talking about here in a moment. But it’s also been a massive day, not only here in Las Vegas, but really worldwide for the launch of the AI PC, the Copilot Plus PC. We’re going to have to keep working as analysts on getting the marketecture right now, but what a big day, exciting day. What a great run for Dell over the past few months. And it’s really good to be here in Las Vegas.

Patrick Moorhead: Yeah, totally. And we’ve heard this term thrown around on stage. We saw this GTC, it’s this concept of the AI Factory. I love that term. It kind of reminds me of a power plant making stuff, and I can’t think of a better person to have this conversation, to kind of break this down than Sam Grocott. Sam, great to see you.

Sam Grocott: I’m great. You refer to me as Mr. AI Factory. I’ve been pushing the AI Factory for months now. So I live, I operate, I thrive in the AI Factory.

Patrick Moorhead: So you’re the guy. Okay.

Sam Grocott: I’m the guy.

Patrick Moorhead: That’s great.

Sam Grocott: Yes. I mean, to be fair, Jensen and Michael have been working on this for over a year, but it’s my job to make the AI Factory real for our customers and partners.

Patrick Moorhead: Yeah. And listen, explaining things and communicating, we like to think that the best technology will always just make things happen, but AI to some people are so confusing and doing whatever that you do to make that simpler for people to understand, to transact. Kudos to you.

Sam Grocott: Yeah, thank you. And it’s been a journey. We talk a lot about the easy button for AI. Let’s be frank. There is nothing easy about AI right now. Now we are working really hard to make that, and our attempt at doing that is to package everything together and put it under a single nomenclature that we can align with our partner ecosystem around. And the AI Factory is that single unifier for all of us to kind of find our role in, tuck in and be able to tell a very compelling customer and partner story with.

Daniel Newman: Well, sometimes Pat tells me I’m a robot, so I should be working in an AI Factory. But in all serious, this is a really big moment, and I like what you’re saying about the easy button or the lack thereof. We’ve spent a lot of time doing market intelligence and what we’re finding is big investments on POCs, a lot of redistribution of partnerships. It’s a reconstruction of vendor relationships. Companies are almost inflecting and starting like it’s the GPU era is a whole new thing, a whole new era, a whole new buying cycle. And the AI Factory, Sam, is a really exciting moment for Dell.

Sam Grocott: Yeah. And I thought Michael and Jensen did a really good job talking about this journey we’ve been on to modernize the old data center. You can modernize to a certain extent, but when you get to the AI use cases, it’s a rebuild from day one and it’s architected from the ground up for an AI first mindset. You can only modernize the old ways so far without having to then deploy the new technologies and really take advantage of AI.

Daniel Newman: 70 blackwells, don’t seduce me, Pat.

Sam Grocott: Yeah, that’s right.

Patrick Moorhead: So there’s been a lot of discussion on, and by the way, this has been a discussion for 15 years is where should I do my workload? Where does my AI Factory sit? And is it going to be one of these, it should be in the cloud, it should be on-prem, on the edge, or is it one of these everywhere?

Sam Grocott: Yeah, I’m glad you brought that up because look, I think there’s a lot we can learn from over the last decade. We all remember 10 years ago cloud first, the amount of pressure that every board was pushing on IT to find your cloud use case, get in the cloud, and a lot of people frankly thought everything was going to be in the cloud. Fast-forward 10 years later and they couldn’t have been more wrong in so many different ways. We still have upwards of 70 to 80% of data that lives on-premises or at the edge. So maybe a third of data or so moved to the cloud.

And then the cost realizations of that bill of putting all of your data in the cloud really doesn’t make economical sense. So you have to take a really strong use case approach. So I think we can learn from these cloud sins of the past is one way to think about it and not do that with AI. What we saw in the first inning, say last year was that pressure to do AI right away, find that early win, people went to the public cloud. But we have to be smarter, not wait 10 years to figure out what the cost is, not wait 10 years to find out what workloads make sense. We can do that right now.

And I think what we’re going to find, and we certainly believe, is that you should bring AI to your data, not bring your data to AI. And that really fundamentally pits on-prem versus public cloud right away. And yes, data will be everywhere, but I think it’s finding the right percentages of the use cases. Will the third of your AI workloads live in the cloud? I think so. Will 2/3 live on-prem at the edge or on a device? Yeah, I think so. So I think finding the way to deploy the AI Factory in the right place at the right time is kind of the art of being successful with AI.

Daniel Newman: So let’s take a step back. Because I think we’ve sort of, as Stephen Covey likes to say, “Begin with the end in mind,” right? But the Dell AI Factory you put up or Michael put up a great slide. So for those that were there, they saw it, but some of the audience maybe hasn’t seen the Dell AI Factory. Can you construct the factory a little bit for the audience and tell them a little bit about what Dell is meaning by an AI Factory?

Sam Grocott: Yeah, sure, sure. So the AI Factory is essentially the collection of products, solutions, and services that AI, I’m sorry, that Dell delivers and builds for our customers and our partners. So there’s five fundamental elements to the AI Factory. The first is your data. It always starts with your data. That is ultimately going to be what’s the differentiator for organizations to do AI in a unique non-generic way. And where does your data live? Again, back to on-prem, it largely lives on-prem or at the edge, then you get a layer of infrastructure on top of that.

Dell is uniquely advantaged in that, we have the broadest portfolio of AI infrastructure. So whether it’s your laptops, your devices to your compute storage, networking, data protection, and then of course your hybrid cloud, multi-cloud capabilities as well. So that infrastructure layer is the second layer. The third layer is our open ecosystem approach. And we are very much an open ecosystem. Whether you’re talking about silicon diversity with Nvidia GPUs, Intel, AMD GPUs, or you’re talking closed models or open source models, we’re showcasing Meta Hugging Face integration tomorrow.

We believe customers need flexibility and choice to decide what type of applications to run within the factory. Kind of the top of the factory is services. We can start from strategy to implementation, use case prioritization, and then ultimately scaling it and managing your infrastructure for you. At the end of the day though, the last fifth element, so to speak of the AI Factory is the use cases. And to me, I could have started there.

Patrick Moorhead: Sure.

Sam Grocott: It’s like the economy, stupid-

Patrick Moorhead: It’s like what you want to actually do with the factory.

Sam Grocott: Exactly. So we have this tendency to start from the data and build up, like the economy, stupid, it’s the use case, stupid. Every enterprise on earth is looking for help of what is the right use case. And if we start our conversations there, we can get really quickly to our customer’s needs and get them that early quick win, so they can pacify the pressure that they’re getting, but also develop muscle memory on what is successful AI look like, how do I build a true ROI of AI. I think that’s where most customers are looking for help today.

Patrick Moorhead: We talked a little bit about where AI factories in general should be, and it’s like everything, it depends, right?

Sam Grocott: Yeah, that’s right.

Patrick Moorhead: And you’re going to have things spread out. And by the way, I like the mature place we’re at as an industry that where we just look at where these things should be and why, and you hit cost. But now that these private cloud software stacks are five to six years old, it’s still not as much as the cloud software stacks, which are about 15 years ago. But the private cloud software stacks are getting more mature.

So you could apply a DevOps mentality against that, but that’s 75% of the data being on-prem or on the edge, it pulsates, and the enterprise that we work with, that is where they’re getting hung up like, how do I piece this together? And it sounds like if you follow this template in the AI Factory, not only will you help people maybe prioritize the use cases, but will give you some solid ground on the infrastructure and the data to make… Am I getting this right?

Sam Grocott: That’s right. No, you should be selling this for us. Fantastic.

Patrick Moorhead: Here we are. So then that begs the obvious question. Let’s talk differentiation and distinction. Dan and I, I think we’ve been to 30 AI events this year alone, and there’s a lot of people that seem to be going for this similar thing, not exactly the same. What distinguishes the Dell AI Factory from your contemporaries?

Sam Grocott: Yeah, we get that question all the time. Can anybody else build an AI Factory? Well, no, and there’s really three or four key reasons-

Patrick Moorhead: That’s provocative.

Sam Grocott: Yeah, absolutely, not the way that we define it, because to your point, an AI Factory could live in your data center. It could have factory bits in the public cloud. It could have factory bits in a cloud partner provider, a colo facility. And then you could have factory bits on your PC, on your end user device. Where are you going to go besides Dell to kind of touch all those different places and provide you that infrastructure? So breadth of portfolio is unmatched in the industry. We’re the only one stop shop infrastructure provider for all of your AI Factory use cases. We talked about our open ecosystem approach. We’re not going to force specific closed models or limit the amount of choice that you provide, so we offer maximum choice.

Two things we haven’t talked about time to value and TCO. Back to the public cloud versus on-premises discussion. We’ve benchmarked this really, really closely when it comes to inferencing, comparing the cost, the total cost of ownership to do inferencing within the public cloud or on-prem. We’re upwards of 75% lower cost or better total cost of ownership than the public cloud. So the financial, the economics, the ROI really come into play and that’s when only when choosing Dell infrastructure. And the last one there is time to value. We’ve got such great expertise and we talked a little bit about this earlier. Dell is eating our own dog food.

We are leading the way. We are a very large enterprise customer of our own that are deploying AI across all the key facets of the business today. We can now share those best practices and we are, so the time to value to deploy AI with Dell in the Dell AI Factory is upwards of 80% faster than if you were to do it on your own. Breath of portfolio, open ecosystem, depth of services portfolio, time to value TCO. Those are the five key distinguishers of why the Dell AI Factory is better than any other generic factory that you could build out there.

Daniel Newman: I tell you what, Sam, I know that our performance lab team, it’s a joint venture between Patrick and my firm, Futurum Group, The Six Five. We actually tested some of these proof of concepts with Dell and with your technology. And those findings could be out there, we’ve created some collateral. We should make sure everyone sees them because it was a very interesting TCO, and we are seeing some interesting time to value data. I think that’s going to be a big marker. A lot of egress.

A lot of companies have to decide what data stays, what data goes. There will be a lot of on-prem for companies that want to get that value sooner. And the economics of AI is a really important component right now, because the dollars of the IT budget aren’t getting bigger. They’re being redistributed to AI projects. So these CIOs and these business leaders and they need to be really, really smart. But I could stand here and talk to you. We could sit here probably for another hour. I could stand or sit, Sam, and talk to you. But I just want to say thanks so much for stopping by.

Sam Grocott: Absolutely.

Daniel Newman: Congratulations on the progress being made this year. It’s been a heck of a run for-

Patrick Moorhead: Yeah, really.

Daniel Newman: … Dell technology.

Patrick Moorhead: Congratulations.

Daniel Newman: I remember some meetings you and I had years ago in the multi-cloud conversations. AI has really been a big moment for Dell and it’s really finding some momentum and I know there’s a lot of your work.

Sam Grocott: Yeah, and thank you both for your partnership. Couldn’t be more excited to spend time with you. It’s always my… This is my first thing of the entire week outside of the keynotes, so I’m super excited. Have a great week and appreciate the partnership. Thank you.

Patrick Moorhead: Thank you.

Daniel Newman: We’ll see you soon, sir.

Sam Grocott: Yes.

Daniel Newman: All right, everybody, if you’re with us live, thanks so much for joining. And of course, for everyone out there as part of our Six Five community, we appreciate you being part of it. Hit that subscribe button. Stay with us live here at the event, The Six Five and Dell Technologies partnering here at Dell Technologies World 2024 in Las Vegas. Patrick and I, signing off for now.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.