- Windows 11 migration remains slow as companies continue relying on aging hardware fleets
- Dell sees flat PC sales ahead while server demand shows clear growth
- Memory prices rise sharply as manufacturers shift resources toward AI-focused components
Dell is warning the shift from Windows 10 to Windows 11 remains far behind expectations.
As part of its most recent financial results, the company revealed the current transition rate is ten to twelve points lower than the pace seen during the previous operating system phase-out.
For this reason, Dell expects flat PC sales next year, even though about 500 million PCs cannot run Windows 11 due to hardware limitations.
Slow upgrade cycle across the PC market
Many of these systems remain functional enough that organizations have delayed replacement, Dell says, a mood which seems to affect every segment, from desktops to smaller systems such as a mini PC.
Dell reported stronger results from its server and networking units as orders for AI-focused systems reached more than twelve billion dollars in the last quarter.
Revenue from servers and networking climbed thirty-seven percent year over year, with demand driven by buyers seeking denser hardware to consolidate aging fleets.
The company said increased memory and storage requirements are pushing up system costs at a time when RAM and NAND prices are high due to manufacturers prioritizing 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 operational model allows it to adjust pricing, modify configurations, or direct buyers toward alternative products depending on supply conditions.
The company recorded $27 billion in quarterly revenue, an 11% annual increase, and said it expects revenue of $31.5 billion in the next quarter and over $111 billion in fiscal year 2026.
Dell said a large share of this growth will likely come from server replacements because many customers still operate fourteenth-generation systems.
Its current seventeenth-generation models will replace multiple aging devices, each carrying a higher selling price due to expanded memory and storage requirements.
Nutanix, one of Dell’s partners, reported year-over-year revenue growth and continued customer movement away from VMware.
Its leadership said many clients need flexibility in aligning licensing timelines with migration plans.
They also noted ongoing memory shortages could limit expansion efforts, although upcoming integrations with external storage are expected to support broader adoption.
Dell maintains it can withstand flat business laptop demand because of its strength in enterprise hardware.
Orders for AI servers reached more than $12 billion for the recent quarter, while revenue from servers and networking climbed 37%, suggesting demand for compute infrastructure remains strong even as some buyers hold onto older systems.
The situation shows businesses may be prioritizing infrastructure upgrades over operating system transitions.
Companies seem to be cautious about broad PC replacements until hardware shortages and cost pressures ease.
Via The Register
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