- Migration to Windows 11 remains slow as companies continue to rely on legacy hardware
- Dell forecasts flat PC sales to rise as server demand shows clear growth
- Memory prices soar as manufacturers shift resources to AI-focused components
Dell warns moving from Windows 10 to Windows 11 remains far beyond expectations.
As part of its latest financial results, the company revealed that the current rate of transition is ten to twelve points lower than the rate observed during the previous period. operating system phase out.
For this reason, Dell expects flat PC sales next year, although about 500 million PCs will not be able to work. Windows 11 due to hardware limitations.
Slow update cycle in the PC market
Many of these systems remain functional enough that organizations are delaying replacement, Dell said, a sentiment that seems to be affecting every segment, from desktops to smaller systems like PCs. mini pc.
Dell reported stronger results from its server and networking divisions as orders for artificial intelligence-focused systems reached more than twelve billion dollars in the latest quarter.
Server and networking revenue grew thirty-seven percent year over year, with demand driven by customers seeking higher-density equipment to consolidate legacy fleets.
The company said rising memory and storage requirements are driving up system costs, while RAM and NAND prices are high due to manufacturers prioritizing artificial intelligence components.
Dell plans to use supply chain practices developed during the pandemic and recent tariff changes to limit the impact of this shortage.
The company told investors that its operating model allows it to adjust prices, change configurations or direct customers to alternative products depending on supply conditions.
The company posted quarterly revenue of $27 billion, 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 much of that growth will likely come from server replacements, as many customers still use 14th-generation systems.
The current seventeenth-generation models will replace several legacy devices, each of which will cost more due to expanded memory and storage requirements.
Nutanix, one of Dell's partners, reported year-over-year revenue growth and continued customer churn from VMware.
Company management said many customers need flexibility in aligning licensing timelines with migration plans.
They also noted that ongoing memory shortages may limit expansion efforts, although upcoming integration with external storage is expected to drive wider adoption.
Dell claims it can withstand flat business laptop demand due to its strength in enterprise hardware.
Orders for artificial intelligence servers reached more than $12 billion in the latest quarter, and server and networking revenue grew 37%, suggesting demand for computing infrastructure remains strong even as some buyers retain older systems.
The situation shows that enterprises may be prioritizing infrastructure upgrades over operating system upgrades.
Companies appear wary of mass PC replacements until hardware shortages and pricing pressures ease.
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