- Migration to Windows 11 remains slow as businesses continue to rely on aging hardware fleets
- Dell sees stable PC sales going forward, while server demand shows clear growth
- Memory prices rise sharply as manufacturers shift resources toward AI-focused components
Dell warns that the move from Windows 10 to Windows 11 remains far behind expectations.
As part of its most recent financial results, the company revealed that the current transition rate is ten to twelve points slower than the pace seen during the phase-out of the previous operating system.
For this reason, Dell expects PC sales to remain stable next year, although around 500 million PCs cannot run Windows 11 due to hardware limitations.
Slow update cycle in the PC market
Many of these systems are still functional enough that organizations have delayed replacing them, Dell says, a mood that seems to affect every segment, from desktop computers to smaller systems like a mini PC.
Dell reported stronger results from its server and networking units, as orders for AI-focused systems reached more than $12 billion in the latest quarter.
Server and networking revenue increased thirty-seven percent year over year, with demand driven by buyers seeking denser hardware to consolidate aging fleets.
The company said higher memory and storage requirements are driving up system costs at a time when RAM and NAND prices are high as manufacturers prioritize AI components.
Dell plans to rely on supply chain practices developed during the pandemic and during recent tariff changes to limit the impact of these shortages.
It told investors that its operating model allows it to adjust prices, modify configurations or direct buyers to alternative products depending on supply conditions.
The company posted $27 billion in quarterly revenue, an 11% year-over-year increase, and said it expects revenue of $31.5 billion in the next quarter and more than $111 billion in fiscal 2026.
Dell said a large portion of this growth will likely come from server replacements because many customers are still operating 14th-generation systems.
Its current 17th generation models will replace multiple outdated devices, each of which will have a higher selling price due to expanded memory and storage requirements.
Nutanix, one of Dell’s partners, reported year-over-year revenue growth and a continued shift of customers away from VMware.
Its leadership said many customers need flexibility to align licensing schedules with migration plans.
They also noted that current memory shortages could limit expansion efforts, although upcoming integrations with external storage are expected to support broader adoption.
Dell maintains that it can support continued demand for business laptops thanks to its strength in business hardware.
AI server orders reached more than $12 billion in the latest quarter, while server and networking revenue rose 37%, suggesting demand for computing infrastructure remains strong even as some buyers cling to older systems.
The situation shows that companies may be prioritizing infrastructure upgrades over operating system transitions.
Companies appear to be cautious about blanket PC replacements until hardware shortages and cost pressures ease.
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