Dell’s recent Q3 earnings call has unveiled a notable delay in the transition from Windows 10 to Windows 11, a revelation that has caught many by surprise. Jeffrey Clarke, Dell’s COO, confirmed that the upgrade process is progressing at a slower pace compared to the previous shift to Windows 10. “We have not completed the Windows 11 transition,” he stated, emphasizing the ongoing nature of this significant upgrade.
Comparative Upgrade Rates
Clarke elaborated on the current upgrade trajectory, noting that the rate of adoption for Windows 11 lags behind that of Windows 10 by approximately 10 to 12 percentage points. This comparison highlights the challenges faced in convincing users to embrace the new operating system. The previous transition was largely driven by the impending end of support for Windows 10, which has not been the case for Windows 11, leading to a more cautious approach from users.
Recent data from the Steam Hardware Survey indicates a gradual increase in Windows 11 users, suggesting that many are waiting until the last moment to make the switch. This hesitance may stem from the lingering fondness for Windows 10, which continues to be a favorite among many users.
Hardware Limitations and Opportunities
Another factor contributing to the slow upgrade rate is the hardware requirements associated with Windows 11. Clarke pointed out that while the current installed base of PCs stands at around 1.5 billion units, approximately 500 million are capable of running Windows 11 but have yet to upgrade. Furthermore, another 500 million users would need new hardware to make the transition. “These represent rich opportunities to upgrade towards Windows 11 and modern technology,” he remarked, indicating a potential market for new PC sales.
In the broader context of the PC market, Clarke expressed optimism about future growth, particularly with advancements in AI technology and the introduction of neural processing units (NPUs). Despite Dell’s outlook being “roughly flat year-over-year,” the company has previously reported significant growth in the PC sector, particularly in the mid to high digits.
AI and Market Dynamics
As with many technology firms, Dell is placing considerable bets on AI hardware. The company’s server and networking segment achieved a remarkable .1 billion in revenue, reflecting a 37% year-over-year increase. This growth underscores the importance of innovation in driving sales and adapting to market demands.
Meanwhile, Microsoft remains committed to promoting Windows 11, albeit at a gradual pace. However, rising component prices, particularly for RAM and graphics cards, could further impede this transition, adding another layer of complexity to an already challenging upgrade process.
