AI moves into high gear: Dell and Microsoft make hybrid AI practical
Dell has shifted from "box builder" to a full-stack partner in the hybrid-AI-cloud era. The latest announcements tied to Microsoft Ignite show a clear intent: run AI where the data and teams already are - on-prem, in Azure, and across the edge - with one operating model.
Why now? theCUBE Research reports 92% of organizations want cross-cloud and on-prem pipeline interoperability. That's the real demand signal: consistency, not just capacity.
The ecosystem matters: Azure + Dell
"Microsoft isn't trying to do everything alone," said Rob Strechay, principal analyst at theCUBE Research. "The Dell + Microsoft ecosystem, from Azure Local to PowerScale running natively as an Azure service, is becoming essential to delivering AI where customers actually are."
This is the story: a practical bridge between public cloud services and private environments that need performance, data locality, and control.
Azure Local + Dell PowerStore: a clean on-ramp
Azure Local (formerly Azure Stack HCI) delivers Azure services on hardware for on-prem or edge. It sits under the Azure Arc umbrella to extend Azure management anywhere. For many Dell customers, the win is simple: plug PowerStore into Azure Local and avoid buying new hardware to go hybrid.
"With PowerStore, it's enabling organizations to scale the compute and the storage independently," said Matt McSpirit, senior principal engineering technologist at Dell. "Advanced data efficiency keeps the data reduction always on, lowering storage costs without impacting performance."
Microsoft customers get security, compliance, and familiar tooling from the Azure model - without losing data residency and operational control. "We are extending Azure's fundamental principles - security, sovereignty and a consistent operating model - into private cloud," said Meena Gowdar, senior director of product management at Microsoft. "What customers love about Azure is extended through Azure Arc."
PowerScale as a cloud service on Azure
Dell is making PowerScale available as a fully managed, cloud-native file service on Azure infrastructure. You provision directly from the Azure portal, use Azure-native ops, and keep a single experience across on-prem and cloud.
"It's about creating a truly integrated experience that lets businesses do more with their data," said Rachna Lalwani, senior consultant, director and product manager at Dell. "What's also new is custom compute instances purpose-built for Dell."
Close the confidence vs. capability gap in cyber recovery
Data movement across clouds and sites raises risk. "The big risk is that you think your capabilities are what they aren't," said Colm Keegan, senior consultant of product marketing at Dell. "The worst time to find that out is during a breach."
Dell announced advancements to PowerProtect Backup Services built on Azure. You can now deploy it directly from the Azure Marketplace and use Azure consumption credits to protect hybrid workloads and SaaS apps with an enterprise recovery posture.
AI PCs and the agentic future
AI is moving on-device - phones, cars, PCs, wearables. Following Copilot+ PCs, Dell added services for Microsoft Copilot Studio and Azure AI Studio to help teams build and deploy Copilot agents, including support for Azure AI services in Dell's hybrid cloud for Azure.
Microsoft added Copilot Voice for hands-free interaction and Copilot Vision for on-screen guidance, plus Copilot+ experiences like Recall and Click to Do for workflow speed. "Azure's standardized infrastructure for agentic workloads paired with Dell's hybrid and on-prem innovations gives customers the consistency, observability and trust layers they need to move beyond pilots and into production at scale," Strechay noted.
To support that shift, Dell extended its AI Factory program with reference architectures for retrieval-augmented generation, agentic automation pipelines, and multimodal enterprise search - tying PC, workstation and data center into one operational fabric.
Hybrid-first: practical wins for data teams
At Ignite, Dell and Microsoft made hybrid feel practical. "By aligning Dell Private Cloud and PowerStore directly with Azure Local, they're giving enterprises a way to run Azure operationally, but with on-prem performance, security boundaries, and data locality still intact," said Paul Nashawaty, principal analyst at theCUBE Research. His research shows more than 60% of teams keep their highest-value workloads on-prem due to data gravity and regulation - even as they prefer the Azure model.
He added: "AI readiness now hinges on the data layer. About 70% of AppDev and platform leaders say data fragmentation is the #1 blocker to scaling AI beyond pilots. Compute gets the spotlight, but production AI comes down to where the data lives and how fast you can move, secure and govern it."
What IT and dev teams can do next
- Map top AI workloads to Azure Local + PowerStore for data locality, and standardize ops with Azure Arc.
- Pilot cloud-native PowerScale on Azure for file-heavy training and RAG pipelines; compare latency and cost vs. on-prem.
- Enforce a single governance model across on-prem and cloud (policy-as-code, identity, data lineage) before scaling agents.
- Test cyber recovery quarterly with PowerProtect Backup Services and prove RTO/RPO with red-team scenarios.
- Adopt Dell's AI Factory reference architectures for agentic automation and enterprise search to move beyond proofs-of-concept.
- Upskill teams on hybrid AI ops, Copilot agents, and data engineering for RAG. Curated tracks for IT and dev roles: AI certifications and learning paths.
Why this approach works
It meets teams where their data sits, applies one control plane for governance, and reduces time lost to stitching tools. That's how you ship real AI features faster, without creating new data silos or compliance gaps.
(Disclosure: TheCUBE is a paid media partner for Microsoft Ignite. Sponsors of theCUBE's event coverage do not have editorial control over content on theCUBE or SiliconANGLE.)
Your membership also unlocks:
