Dell Says AI Supply Outruns Price as Apple's iPhone Duo Faces Shortages

David Schmoock, Dell's senior vice president of global revenue operations, said in an interview with SiliconANGLE's theCUBE at the Dell Technologies New York Symposium that the shortage has changed how customers buy hardware. Dell's AI server sales helped drive a strong earnings beat in its latest quarter even as component costs rose, according to the report.

Schmoock said demand began accelerating last November, and the surge in graphics processing unit servers for AI pulled standard x86 servers along with it. Dell Chief Operating Officer Jeff Clarke told investors in September that shortages had spread beyond memory, storage and central processing units to rack-level cooling, networking and power components. Dell is now asking customers to share deployment plans much earlier than in past hardware cycles.

"The key, though, is how do we plan with our customers earlier? If you come to us late in our cycle, yeah, we'll respond to [a request for proposal] just like anyone else," Schmoock said. "But you wouldn't have that collaborative planning that may delay your rollout."

Price once dominated negotiations, but Schmoock said the market is entering a period of cost inflation. Customers for whom technology is the product, such as high-frequency traders, have been among the first to secure delivery schedules, he said. He added that companies also need to redesign workflows before fixing the data layer to get more value from AI.

"If all you do is apply AI to existing processes, you'll get a slight improvement in productivity," Schmoock said. "You're not going to get the [tenfold gains] that we all want to go drive."

Dell has used that approach to decouple revenue growth from operating expenses, which traditionally rose in parallel, Schmoock said. The next challenge is managing a cost base that blends people with AI tokens. He compared the task to a National Football League salary cap: a team can afford only one star quarterback, so it must fill the rest of the roster with lower-cost players who still contribute.

"Thinking of tokens is no different. You can only use frontier models for so much of your work," he said. "You're going to have to use older versions, you're going to have to use open-source models, you're going to have to use machine learning."

Schmoock said AI infrastructure also includes traditional x86 workloads that do not require tokens, as well as desktops and workstations that can run inference at the edge. Customers who arrive too late in the process leave Dell scrambling for supply, he said.

"We didn't do that collaborative planning, and now your project may have been delayed 60, 90, 120 days, which has both the cost impact and a business impact," Schmoock said. "I would say bring us in earlier. Allow us to do that collaboration with you. I think at the end of the day you get the most optimal outcome."

Separately, CNBC's Investing Club, citing Reuters, said Apple will have limited quantities of its new foldable iPhone Duo available for walk-in customers when it hits stores Friday and is capping purchases at two devices per customer. Wait times to receive the Duo now exceed three months, which CNBC's Investing Club attributed to both strong demand and supply constraints. The device carries a $1,999 price tag, and Apple is scheduled to report earnings on Nov. 2.

The CNBC report also said U.S. stocks were moving higher, with the S&P 500 and Nasdaq on track for a third consecutive winning session. It said Wednesday's action marked a strong rebound in the AI infrastructure trade, led by technology and industrial stocks tied to data-center buildouts. Part of the move followed strong earnings and bullish commentary from SpaceX, which CNBC described as becoming a major AI hyperscaler in addition to its rocket launch and satellite operations.

SpaceX CEO Elon Musk indicated on the company's earnings call that power, cooling and electrical equipment are limiting factors to getting more gigawatts of compute online, according to the CNBC report, which said investors felt better about the outlooks for GE Vernova, Eaton and Vertiv. Super Micro Computer also preannounced much stronger-than-expected quarterly revenue, helping the tech hardware trade rebound, the report said. Cybersecurity stocks gained amid concerns that AI tools are making it easier and faster to discover software vulnerabilities, while money rotated out of defensive sectors such as healthcare and consumer staples, according to CNBC.