We’re witnessing what many industry experts describe as a cyclical slowdown in IT spending. But beneath this temporary lull lies a perfect storm of factors that will soon drive one of the most significant hardware refresh cycles in recent memory. Organizations that understand and prepare for this approaching wave will position themselves for competitive advantage in an increasingly AI-powered business landscape.
Understanding the Current IT Spending Slowdown
The current deceleration in IT hardware purchases isn’t unexpected. Following the unprecedented surge during the COVID era (2020-2022), when organizations scrambled to support remote work models virtually overnight, we’re experiencing a natural cool-down period. During those pandemic years, companies invested heavily in:
- Notebooks and endpoint devices for remote workers
- Expanded compute capacity to support distributed teams
- Data center products to handle increased digital workloads
This spending boom was further fueled by government funding initiatives and historically low interest rates, creating ideal conditions for technology investment.
However, two key factors have extended the typical refresh timeline:
- Extended Hardware Lifecycles: Even before the pandemic, refresh cycles had gradually lengthened from the traditional three-year model to sometimes five years or more.
- Reduced Wear and Tear: Devices purchased during 2020-2022 have experienced less physical stress working from home environments (climate-controlled, less travel, gentler handling), extending their effective lifespan.
As a result, the double-digit growth for endpoint devices anticipated in early 2025 has materialized as only 3-4% growth in the first quadrimester. Economic uncertainty, tariff concerns, and global conflicts have further contributed to organizational caution around major IT investments.
Two Major Catalysts for the Coming Refresh Wave
While organizations can delay upgrades temporarily, two powerful forces will drive significant hardware investments in the near future:
1. Windows 10 End of Support (October 2025)
Microsoft’s retirement of Windows 10 support represents a critical inflection point. Millions of devices purchased during the 2020-2021 pandemic surge will reach end-of-support status simultaneously, creating both security risks and compatibility challenges for organizations that don’t upgrade. This isn’t merely a software issue—many older devices simply won’t support Windows 11’s hardware requirements, necessitating complete replacements.
2. The AI Integration Imperative
Artificial intelligence is fundamentally transforming both endpoint computing and data center architecture:
For Endpoint Devices: The integration of AI components into chipsets, software interfaces, and productivity suites demands more capable hardware. Basic tasks from video conferencing to document creation now leverage AI processes that older systems simply cannot support efficiently. Organizations seeking to leverage productivity gains from AI-enhanced applications will need to refresh hardware to access these capabilities.
For Data Centers: The impact is even more dramatic. GenAI servers fundamentally differ from traditional servers:
- They’re physically heavier
- They consume significantly more power
- They generate substantially more heat
These differences necessitate comprehensive redesigns of data center infrastructure, including reinforced racks, enhanced power distribution, and advanced cooling strategies. Many organizations will find their existing facilities inadequate for these demands, driving decisions to build entirely new data centers, deploy modular solutions, or shift workloads to hyperscalers like AWS, Azure, or Google Cloud.
Evolving Business Models in the IT Landscape
Beyond the hardware refresh cycle itself, several important shifts are reshaping how organizations acquire and manage technology:
Digital Self-Service Acceleration
For standard “run rate” purchases like PCs, notebooks, servers, and basic software licenses, digital procurement channels continue replacing traditional sales processes. This shift reduces costs for OEMs and partners while improving customer experience through streamlined ordering. However, complex solutions involving multiple business lines or significant customization still require dedicated sales teams and consultation.
The Growing Importance of Partner Ecosystems
Major hardware manufacturers are increasingly leveraging partner networks (resellers like CDW or SHI) to expand market reach, particularly in regions where direct sales teams have limited presence. Even traditionally direct-sales-oriented companies like Dell have invested heavily in partner relationships over the past decade, recognizing their strategic importance for market penetration.
Services as the Profit Center
The real margin opportunity for IT resellers lies not in hardware sales (where margins remain thin) but in the expanding portfolio of services surrounding those products:
- Deployment and installation
- Ongoing maintenance and updates
- Security management
- Asset recovery and lifecycle services
As organizations continue reducing internal IT staffing, they increasingly outsource these “close-to-the-box services” to partners, creating both growth opportunities and stickier customer relationships for service providers.
The Hyperscaler Factor
Cloud giants like AWS, Microsoft Azure, and Google Cloud present both opportunity and challenge for traditional hardware manufacturers. While they offer massive scale potential and enable long-term planning horizons, their enormous buying power drives aggressive pricing pressures and demanding execution requirements from suppliers.
Increased Chipset Competition
The enterprise computing landscape is experiencing unprecedented competition from companies like AMD and Qualcomm challenging Intel’s traditional dominance. This competition is pushing customers to make architecture-level decisions rather than defaulting to established players, driving innovation but potentially compressing margins across the hardware ecosystem.
Strategic Implications for Organizations
Understanding these converging factors creates several imperatives for forward-thinking IT leadership:
- Plan Ahead for the 2025 Crunch: Organizations that wait until Windows 10 approaches end-of-support may face supply constraints, implementation backlogs, and higher costs. Developing a phased refresh strategy now provides competitive advantage.
- Reassess Data Center Strategy: The demands of AI workloads require fundamental rethinking of infrastructure. Organizations should evaluate whether to upgrade existing facilities, build new ones, or leverage cloud services for these specialized needs.
- Consider Total Cost of Ownership: While hardware prices remain a significant consideration, the expanded service ecosystem and productivity implications of AI-capable systems should factor into investment decisions.
- Evaluate Sourcing Models: The evolution of direct, partner, and digital procurement channels presents opportunities to optimize purchasing strategies based on product complexity and organizational needs.
Looking Ahead
While the current IT spending slowdown represents a natural correction following unprecedented pandemic-era growth, the fundamentals driving technology investment remain strong. Organizations face unavoidable refresh requirements due to Windows end-of-support deadlines combined with transformative AI capabilities that demand more from hardware infrastructure.
Those who recognize these intersecting trends and develop comprehensive strategies will be best positioned to navigate the coming refresh wave efficiently and effectively. More importantly, they’ll establish the technological foundation necessary to compete in an increasingly AI-enhanced business environment where computational capabilities directly impact organizational performance.
The question isn’t whether organizations will need to refresh their technology infrastructure, but how strategically they’ll approach this inevitable transition. The decisions made today will shape competitive positioning for years to come.