Microsoft's widely used Windows 10 reached its end-of-life on October 14, creating a potential boost for Windows 11 in PC sales. However, Dell, a major PC manufacturer, reports that the shift has been slower than anticipated. In a recent Q3 earnings discussion, COO Jeffrey Clarke stated, "We have not finalized the transition to Windows 11. In fact, when compared to the last operating system's end of support, we are lagging behind by about 10-12 points." This suggests that the sales within the PC industry have stagnated, and customers are not updating their machines as frequently as expected.
When Windows 10 was phased out, nearly 500 million PCs were unable to upgrade to Windows 11. Concurrently, the Extended Security Updates (ESU) aim to facilitate the transition, rather than act as a long-term fix. Through the ESU program by Microsoft, qualifying devices can still obtain essential security updates for a limited duration after the end of support. The qualifications, pricing, and eligibility differ by location and whether the user is an individual or a business, and the program does not include new features or non-security updates. According to Dell's COO, roughly another 500 million PCs can switch to Windows 11 without requiring a hardware upgrade.
The company posted record results for Q3, totaling $27.0 billion, which is an 11% increase from the previous year. However, this growth was not primarily driven by PC sales. Most of the revenue growth stemmed from AI servers and infrastructure rather than from PC sales. Furthermore, despite achieving mid-to-high single-digit growth in PC sales over the past year, the overall PC sales have remained "mostly flat." This indicates that PC customers are not upgrading their devices as much as was anticipated, with the market now preparing for significant enhancements in performance or functionality, such as those offered by AI PCs.