- Migration to Windows 11 remains slow as businesses continue to rely on aging hardware fleets
- Dell expects PC sales to stagnate while server demand sees significant growth
- Memory prices rise sharply as manufacturers shift resources to AI-focused components
Dell warns that the transition from Windows 10 to Windows 11 remains far from expectations.
As part of its most recent financial results, the company revealed that the current transition rate is ten to twelve points lower than the pace seen during the previous OS phase-out.
For this reason, Dell expects PC sales to stagnate next year, even though around 500 million PCs cannot run Windows 11 due to hardware limitations.
Slow upgrade cycle in the PC market
Many of these systems remain functional enough that organizations are delaying replacement, Dell says, a mood that seems to affect every segment from desktops to smaller systems such as a mini PC.
Dell reported better results for its server and networking units, with orders for AI-focused systems reaching more than twelve billion dollars in the latest quarter.
Server and networking revenue increased 37% year-over-year, with demand driven by buyers seeking denser hardware to consolidate their aging fleets.
The company said increasing memory and storage requirements are driving up system costs at a time when RAM and NAND prices are high due to manufacturers’ focus on AI components.
Dell plans to leverage supply chain practices developed during the pandemic and recent pricing changes to limit the impact of these shortages.
It explained to investors that its operating model allows it to adjust prices, change configurations or direct buyers to alternative products based on supply conditions.
The company reported quarterly revenue of $27 billion, an 11% annual increase, and said it expects revenue of $31.5 billion next quarter and more than $111 billion in fiscal 2026.
Dell said much of that growth would likely come from server replacements because many customers are still using fourteenth-generation systems.
Its current seventeenth generation models will replace several aging devices, each with a higher selling price due to increasing memory and storage requirements.
Nutanix, one of Dell’s partners, reported year-over-year revenue growth and continued customer churn from VMware.
Its executives said many customers need flexibility to align licensing deadlines with migration plans.
They also noted that ongoing memory shortages could limit expansion efforts, although upcoming integrations with external storage should drive broader adoption.
Dell says it can weather stagnant demand for business laptops because of its strength in enterprise hardware.
Orders for AI servers reached more than $12 billion in the latest quarter, while server and networking revenue soared 37%, suggesting that demand for IT infrastructure remains strong even as some buyers hold on to older systems.
The situation shows that businesses may prioritize infrastructure upgrades over operating system transitions.
Businesses appear wary of mass PC replacements until hardware shortages and cost pressures ease.
Via the register
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