Microsoft has acknowledged that the recent surge in PC sales was largely fueled by the impending end of support for Windows 10, rather than demand for AI-powered computers.
The admission came during the company's fourth-quarter fiscal 2026 earnings report, where total corporate revenue reached $90.0 billion.
In the report, Microsoft revealed a 7% drop in Windows OEM and Devices revenue, along with a 5% decline in Windows OEM revenue.
Executives attributed the hardware slowdown to lower market demand and difficult year-over-year comparisons.
"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," Microsoft noted during the earnings call, as first spotted by Windows Latest.
"Results were ahead of expectations as OEM and channel partners continued to build inventory given increasing component prices."
The company has since updated its support documentation to show that Windows 10 support is extended through October 2027.
Microsoft is also directly informing users via email that they can secure an extra year of extended security updates instead of immediately upgrading to Windows 11.
Hardware Partners See Opportunity
Meanwhile, hardware partner HP continues to attribute its market progress to both operating system transitions and emerging AI technology.
Karen L.
Parkhill, HP's Executive Vice President and Chief Financial Officer, addressed investors in late May 2026 regarding the remaining user base on older software.
"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 said.
HP leadership views the remaining users as a key opportunity for future hardware upgrades.
Ketan Patel, President of HP's Personal Systems business, outlined the strategy for the coming months.
"One, still Windows 11, 30% of the installed base is still to be refreshed.
So, that's one tailwind, which we see as an opportunity in the short run," Patel said.
Conversely, other major manufacturers pivoted their strategies much earlier.
At CES 2026, Dell announced a return to core hardware performance, scaling back its dedicated focus on marketing local AI capabilities to consumers.
"We're getting back to our roots with a renewed focus on consumer and gaming," a Dell executive said at the event.
Dell previously renamed core product lineups around the AI narrative before reversing the decision.
Jeff Clarke, Vice Chairman and COO of Dell Technologies, addressed the strategic pivot during the event.
"It was obvious we needed to change," Clarke said.
During its Q3 2026 earnings call, Clarke disclosed that adoption rates for Windows 11 were lagging 10 to 12 percentage points behind Windows 10 over the same lifecycle period.
Microsoft expects Windows OEM revenue declines to continue into the next fiscal period.
