Microsoft has acknowledged a reality that has been evident for some time: the surge in Windows 11 PC sales can largely be attributed to the conclusion of Windows 10’s support rather than the much-hyped AI PCs. While original equipment manufacturers (OEMs) like HP continue to assert that AI PCs are the driving force behind Windows 11’s adoption, Microsoft’s latest data paints a more nuanced picture.
In its fiscal fourth-quarter report for 2026, Microsoft announced a staggering revenue of billion, surpassing Wall Street predictions and resulting in a notable increase in its stock value. During the earnings call, CEO Satya Nadella emphasized the need for substantial “quality work” on Windows 11, promising a significant update aimed at enhancing the platform’s core functionalities.
Despite the impressive revenue figures, Microsoft revealed a 7% decline in Windows OEM and Devices revenue, with a 5% drop in Windows OEM revenue. This raises questions about the supposed boom in AI PC sales. The reality is that much of the previous growth was driven by the impending end of support for Windows 10, which has now slowed down due to extended security updates and users’ reluctance to upgrade.
Microsoft’s own statements during the earnings call reflect this trend: “Windows OEM and Devices revenue decreased 7%, and Windows OEM decreased 5% driven by lower PC market demand and a high prior-year comparable that benefited from Windows 10 end of support,” as noted in the report. The company also mentioned that OEM and channel partners have been building inventory in response to rising component prices.
Microsoft says it’s fully supporting Windows 10 for another year
In a strategic move, Microsoft has extended support for Windows 10 until October 2027. This decision underscores the challenge the company faces in persuading the remaining holdouts to transition to Windows 11. Rather than pressuring users with upgrade prompts, Microsoft is opting to inform them via email that they can secure support for an additional year, allowing them more time to consider their options.
This email is targeted at users with a Microsoft account on Windows 10 PCs, including those already enrolled in extended support. By framing the message around continued support, Microsoft is subtly acknowledging that many users may not be ready to embrace Windows 11 just yet. Should the adoption rate remain sluggish, it wouldn’t be surprising if support were extended to 2028.
The extension of Windows 10 support was quietly confirmed in an updated support document, which might have gone unnoticed without diligent tracking of the company’s documentation.
HP says AI PCs are driving sales. The numbers tell a different story.
HP stands out as an OEM still championing the narrative of AI PCs as the catalyst for sales growth. In a recent earnings call, CFO Karen L. Parkhill revealed that approximately 30% of HP’s installed base remains on Windows 10. This statistic is significant enough to influence the overall earnings discussion.
“We did see good growth in both EMEA and APJ this quarter. And some of that was driven by the expected tailwinds from Win 11. And I would say, at this point, we have roughly 30% of the installed base still on Windows 10,” Parkhill stated. Ketan Patel, President of HP’s Personal Systems business, framed this remaining 30% as a potential opportunity, suggesting that the transition to Windows 11 represents a short-term growth driver.
However, the growth HP describes seems to stem from Windows 10 users finally upgrading their hardware rather than a surge in demand for AI features. HP appears to be positioning this migration as a win for AI PCs, even as the underlying motivations may differ.
Dell already walked back its AI PC bet months ago
Dell has been quicker to recalibrate its strategy, having recognized the limitations of the AI PC narrative earlier this year. At CES 2026, the company announced a shift away from its AI PC focus, redirecting attention to gaming, build quality, battery life, and display enhancements. “We’re getting back to our roots with a renewed focus on consumer and gaming,” a Dell executive remarked during the event.
This pivot is not merely a marketing maneuver; Dell had previously committed heavily to AI branding, even rebranding its product lines to align with the AI PC concept. Vice Chairman and COO Jeff Clarke acknowledged the need for change, stating, “It was obvious we needed to change.” The return of the XPS line in 2026 signifies a shift back to familiar offerings, while the company continues to grapple with sluggish Windows 11 adoption rates.
Microsoft is left with a problem heading into 2027
As Microsoft faces a 7% decline in Windows OEM and Devices revenue and anticipates a further drop next year, the reality becomes clear: the AI PC narrative has not proven to be the driving force behind hardware sales. Instead, the retirement of Windows 10 has played a pivotal role in shaping market dynamics.
With the recent extension of Windows 10 support and ongoing challenges in adoption rates, Microsoft finds itself in a precarious position. Nadella’s commitment to focusing on the “fundamentals” of Windows 11 may be the only viable strategy left to ensure that OEMs like HP can craft a compelling AI PC narrative in the future.
