Dell has issued a clear warning to investors and customers alike. Businesses are not moving from Windows 10 to Windows 11 at the pace the company anticipated.
In its latest earnings report, Dell said the current upgrade cycle is running ten to twelve percentage points behind the transition speed seen during the previous Windows operating system phase-out. As a result, Dell expects business PC sales to remain largely flat over the coming year.
This slowdown is happening even though Microsoft ended mainstream support for Windows 10 and roughly 500 million PCs worldwide cannot meet Windows 11 hardware requirements.
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Businesses choosing delay over replacement
According to Dell, many organizations are choosing to delay hardware refreshes because existing systems remain functional enough for daily work. This hesitation spans desktops, laptops, and even compact systems like mini PCs.
For many IT teams, the cost of replacing otherwise usable machines outweighs the perceived risk of staying on Windows 10, especially in an environment where budgets are under pressure and hardware prices remain elevated.
This cautious approach has directly impacted demand for traditional business PCs.
Servers and AI infrastructure tell a different story
While PC sales are stalling, Dell’s enterprise infrastructure business is moving in the opposite direction. The company reported more than $12 billion in AI server orders during the most recent quarter.
Revenue from servers and networking rose 37 percent year over year, driven largely by customers consolidating older systems into denser, more powerful hardware. Dell said many buyers are still operating fourteenth-generation servers and are now moving to its seventeenth-generation platforms.
These newer systems often replace multiple older machines and command higher prices due to increased memory and storage requirements.
Memory shortages and rising component costs
Dell acknowledged that rising RAM and NAND prices are putting additional pressure on system costs. Memory manufacturers are prioritizing AI-related components, which has tightened supply across the broader market.
The company said it is relying on supply chain strategies developed during the pandemic and recent tariff disruptions to stay flexible. This includes adjusting pricing, changing system configurations, or steering customers toward alternative products depending on availability.
Partners see similar enterprise trends
Dell partner Nutanix also reported strong year-over-year growth, noting continued customer movement away from VMware. Nutanix leadership said many organizations are seeking flexibility in licensing timelines to better align with long migration projects.
However, Nutanix echoed Dell’s concerns around memory shortages, warning that constrained supply could limit expansion in the near term. Upcoming integrations with external storage systems are expected to help ease those constraints.
Infrastructure over operating systems
Dell’s latest outlook highlights a broader shift in enterprise priorities. Companies appear more willing to invest in backend infrastructure and AI-ready systems than in large-scale PC replacements tied to operating system upgrades.
With server and networking revenue accelerating and business PC demand flattening, Dell believes it can weather slow Windows 11 adoption by leaning on enterprise hardware growth.
For now, the message from the market is clear. Many businesses are choosing to extend the life of their Windows 10 machines while focusing spending on infrastructure that delivers immediate performance gains.
