Commercial ClientNarrow moat

Dell Technologies (DELL) — moat facet

Business PCs are a $44 billion line that has earned a thin margin for a decade and is growing again mostly on price.

Commercial client, business PCs and workstations, is Dell's second-largest line and, until fiscal 2026, was its largest. It sold $44,062 million in fiscal 2026, about 39% of company revenue12.

Commercial client revenue by fiscal year ($M)28,754FY201526,006FY201745,576FY202239,814FY202444,062FY2026Dell Forms 10-K FY2017, FY2024 and FY2026
A pandemic peak, a slump, a recovery.

What is inside is notebooks, desktops and workstations sold to companies, schools and governments, usually in fleets, often with support contracts and management tools, through Dell's direct sales force and its channel partners3.

The history is steady with one boom. Commercial revenue was $28,754 million in fiscal 2015 and $26,006 million in fiscal 20174, rose to $45,576 million in fiscal 2022 and $45,556 million in fiscal 2023, fell 13% to $39,814 million in fiscal 20245, and recovered to $40,844 million and $44,062 million6. The fiscal 2022 peak reflected the pandemic rush to equip remote workers; fiscal 2024 was the hangover.

How it is paid: hardware sold on delivery, with support contracts recognised over time. Fiscal 2026 growth came "primarily due to an increase in units sold and richer configurations"7, meaning companies bought more machines and paid more for each.

Profitability is disclosed only for the whole client segment, which earned an operating margin of 5.6% in fiscal 2026, down from 6.1% and about 7.6% in fiscal 20248. That is not far from the segment's margin a decade earlier, 5.2% in fiscal 2015 and 5.0% in fiscal 20179: PCs have always been a thin-margin business for Dell. Commercial is almost certainly the better half of that margin, given consumer's falling prices, but Dell does not split it.

Growth accelerated in fiscal 2027. The line sold $13,020 million in the first quarter and $13,192 million in the second, up 22%1011. IDC recorded Dell's PC shipments down 5% in the same calendar quarter12, so the growth was price and configuration, helped by memory costs passed on13.

The outlook is a refresh cycle against a lengthening replacement cycle, which Dell's own filing flags14. The verdict for this line is steady rather than growing, and the number that would change it is annual revenue: above the fiscal 2022 peak of $45,576 million15 in fiscal 2027 would mean a genuine refresh; a fall back toward $40 billion would mean the recent growth was component inflation.

Moat trajectory: Holding steady

FY2026 +8%; Q2 FY2027 +22% on price and mix.

The number that tests this moat
Reported
Commercial client revenue, full year
$44,062M (FY2026), +8%

The business PC franchise; FY2027 above $45.6bn would mean a genuine refresh.

Source: Dell Technologies Form 10-K, FY2026 ↗
References
  1. ReportedIt sold $44,062 million in fiscal 2026, about 39% of company revenue.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 1 business: history, customers, employees, channels and management. — FY2026 · publ. March 2026 · source ↗
  2. Moat Explorer calcIt sold $44,062 million in fiscal 2026, about 39% of company revenue.
    Moat Explorer calculation from Dell Technologies' reported figures ($ millions unless stated; fiscal years labelled by the year they end). Margins FY2026: gross margin 22,707 / 113,538 = 20.0% (FY2024 21,069 / 88,425 = 23.8%; FY2025 21,250 / 95,567 = 22.2%); operating margin 8,149 / 113,538 = 7.2%. Products gross margin 90,405 - 78,057 = 12,348, 12,348 / 90,405 = 13.7%; services gross margin 23,133 - 12,774 = 10,359, 10,359 / 23,133 = 44.8%; services share of revenue 23,133 / 113,538 = 20.4%; services share of gross margin 10,359 / 22,707 = 45.6%. Growth FY2026: revenue 113,538 / 95,567 - 1 = 18.8%; services 23,133 / 24,147 - 1 = -4.2%; ISG revenue 60,826 / 43,593 - 1 = 39.5%; ISG operating income 7,111 / 5,579 - 1 = 27.5%; United States 63,140 / 51,014 - 1 = 23.8%; foreign 50,398 / 44,553 - 1 = 13.1%. Revenue FY2024 to FY2026 113,538 / 88,425 - 1 = 28.4%; employees 97,000 / 120,000 - 1 = -19.2%; revenue per employee 88,425 / 120,000 = 0.74 and 113,538 / 97,000 = 1.17. AI servers: 24,683 / 1,873 = 13.2 times; share of revenue 24,683 / 113,538 = 21.7% (FY2024 1,873 / 88,425 = 2.1%); share of ISG 24,683 / 60,826 = 40.6%; Q2 FY2027 share of ISG 16,401 / 31,782 = 51.6%; first half 16,132 + 16,401 = 32,533, 32,533 / 74,000 = 44.0%; second half needed 74,000 - 32,533 = 41,467, about 20,700 a quarter; FY2027 guidance share 74.0 / 192.0 = 38.5%; FY2027 guidance 74.0 / 24.683 = 3.0 times. Orders: Q4 FY2026 AI orders about 64 - 30 = 34 billion; Q2 FY2027 orders to revenue 60.9 / 16.4 = 3.7. ISG share of segment operating income: FY2024 4,286 / 7,998 = 53.6%; FY2026 7,111 / 9,944 = 71.5%. Q2 FY2027 CSG share 1,142 / (4,781 + 1,142) = 19.3%. ISG operating margin: FY2022 3,736 / 34,366 = 10.9%; FY2023 5,045 / 38,356 = 13.2%. CSG operating margin: FY2024 3,712 / 48,916 = 7.6%; Q1 FY2026 653 / 12,509 = 5.2%; Q2 FY2026 803 / 12,503 = 6.4%; Q4 FY2026 629 / 13,494 = 4.7%; Q1 FY2027 1,170 / 14,609 = 8.0%; Q2 FY2027 1,142 / 15,034 = 7.6%. CSG operating income FY2022 to FY2026 2,833 / 4,365 - 1 = -35.1%. Q2 FY2027 client: CSG revenue 15,034 / 12,503 - 1 = 20.2%; CSG operating income 1,142 / 803 - 1 = 42.2%. Traditional servers and networking first half FY2027 8,543 + 10,531 = 19,074. Servers and networking growth FY2025 27,136 / 17,624 - 1 = 54.0%, FY2026 44,195 / 27,136 - 1 = 62.9%; share of revenue 44,195 / 113,538 = 38.9%; Q2 FY2027 16,401 + 10,531 = 26,932, 26,932 / 46,971 = 57.3%. Line changes FY2022 to FY2026: servers and networking 44,195 / 17,901 - 1 = 146.9%; storage 16,631 / 16,465 - 1 = 1.0%; commercial 44,062 / 45,576 - 1 = -3.3%; consumer 6,922 / 15,888 - 1 = -56.4%. Storage 16,631 / 17,958 - 1 = -7.4%; storage share of revenue 16,631 / 113,538 = 14.6%; storage share of ISG 16,631 / 60,826 = 27.3%. Consumer share of revenue 15,888 / 101,197 = 15.7% (FY2022) and 6,922 / 113,538 = 6.1% (FY2026); consumer against FY2015 6,922 / 10,880 - 1 = -36.4%. Commercial share of revenue 44,062 / 113,538 = 38.8%. Servers and networking plus commercial 44,195 + 44,062 = 88,257, 88,257 / 113,538 = 77.7%. Corporate and other FY2022 101,197 - 17,901 - 16,465 - 45,576 - 15,888 = 5,367; corporate and other change 1,728 / 5,624 - 1 = -69.3%. Geography: United States share 43,986 / 88,425 = 49.7% (FY2024), 51,014 / 95,567 = 53.4% (FY2025), 63,140 / 113,538 = 55.6% (FY2026). Largest customer: 12% x 113,538 = 13,625; 13,625 / 60,826 = 22.4% of ISG; all other customers 113,538 - 13,625 = 99,913. Remaining performance obligations due within twelve months: 132 x 77% = 101.6 billion. Server share: Dell lead over Supermicro 16.5 - 7.6 = 8.9 points in Q1 2026 against 10 - 9.5 = 0.5 points in 2025; Supermicro plus HPE 7.6 + 3.0 = 10.6%. Inventories 21,290 / 10,437 = 2.04 times; payables 49,723 - 33,630 = 16,093; inventory increase 21,290 - 10,437 = 10,853; payables less inventories 49,723 - 21,290 = 28,433; payables less inventories and receivables 49,723 - 21,290 - 22,918 = 5,515. DFS-related debt 20,660 / 14,646 - 1 = 41.1%. Debt: FY2020 7,737 + 44,319 = 52,056; net core debt 13,983 - 11,569 = 2,414; net debt 31,503 - 11,528 = 19,975 (January 2026) and 34,466 - 11,569 = 22,897 (July 2026); interest paid 1,354 / 8,149 = 16.6%. Goodwill and intangibles 19,547 + 4,533 = 24,080, 24,080 / 101,286 = 23.8%; other assets 101,286 - 24,080 = 77,206. Capital returns: buybacks first half FY2027 5.4 billion / 20 million shares = about $270 a share; dividends paid 1,459 / 5,936 = 24.6% of net income; annual dividend 0.37 x 4 = 1.48, 0.445 x 4 = 1.78, 0.525 x 4 = 2.10, 0.63 x 4 = 2.52, 2.52 / 1.48 - 1 = 70%; Q2 FY2027 buybacks and dividends 3,796 + 405 = 4,201. Guidance: FY2027 revenue 192.0 / 113.538 - 1 = 69%; non-AI revenue 192.0 - 74.0 = 118.0 against 113,538 - 24,683 = 88,855, 118.0 / 88.855 - 1 = 32.8%; implied second half 192.0 - 90.8 = 101.2 billion; implied fourth quarter 101.2 - 49.0 = 52.2 billion; implied second-half GAAP EPS 24.37 - 11.58 = 12.79; guidance raised 192 - 140 = 52 billion. Voting at 1 September 2026: Class A 276,744,341 / 635,812,750 = 43.5% of shares; votes 276.7 million x 10 = 2,767 million, Class B 43.6 million x 10 = 436 million, Class C 315.4 million; total 3,519 million; Class A 2,767 / 3,519 = 78.6%, Class B 436 / 3,519 = 12.4%, Class C 315 / 3,519 = 9.0%. Valuation: trailing revenue 113,538 - 53,154 + 90,813 = 151,197; trailing net income 5,936 - 2,129 + 7,571 = 11,378; P/E 357.89 / 11.378 = 31.5; P/S 357.89 / 151.2 = 2.37; year-end market value over the next fiscal year: 37.89 / 4.616 = 8.2, 54.95 / 3.250 = 16.9, 42.90 / 5.563 = 7.7, 28.80 / 2.442 = 11.8, 54.43 / 3.388 = 16.1, 82.18 / 4.592 = 17.9, 86.61 / 5.936 = 14.6. Q2 FY2027 cash from operations 2,225 / 4,133 = 54%. Further: ISG operating income 7,111 / 4,286 - 1 = 65.9%; Q2 FY2026 AI orders about 30 - 12.1 - 12.3 = 5.6 billion; operating income 8,149 / 2,622 = 3.1 times (FY2020 to FY2026); NVIDIA Data Center revenue against Dell ISG revenue 89.0 / 31.782 = 2.8 times; buybacks 2,080 + 2,588 + 6,014 = 10,682; ISG revenue 60,826 / 14,714 = 4.1 times (FY2015 to FY2026); IEIT, Lenovo and HPE 2025 server shares 4.1 + 4.0 + 3.1 = 11.2%; Commercial share of client revenue 45,576 / 61,464 = 74.2% (FY2022), 39,814 / 48,916 = 81.4% (FY2024); consumer share of revenue 9,102 / 88,425 = 10.3% (FY2024); Dell server growth against the market 244.1 / 80.4 = 3.0 times. Services share of Q2 FY2027 revenue 5,859 / 46,971 = 12.5%; commercial share of client revenue 44,062 / 50,984 = 86.4%; client revenue growth FY2026 50,984 / 48,393 - 1 = 5.4%; consumer Q1 FY2027 1,589 / 1,463 - 1 = 8.6%; CSG first half FY2027 2,312 / 29,643 = 7.8%; annual dividend cost 0.63 x 4 x 635.8 million = about 1,602; remaining performance obligations 132 / 38 = 3.5 times; EPS guidance 24.37 / 11.52 = 2.1 times; AI backlog against second-half AI revenue needed 95 / 41.5 = 2.3 times; commercial first half FY2027 13,020 + 13,192 = 26,212, 26,212 / 44,062 = 59.5%; storage share of ISG 16,261 / 33,885 = 48.0% (FY2024) and 4,850 / 31,782 = 15.3% (Q2 FY2027); consumer share of Q2 FY2027 revenue 1,842 / 46,971 = 3.9%; AI orders less AI revenue in Q2 FY2027 60.9 - 16.4 = 44.5 billion; consumer share of client revenue 10,880 / 39,634 = 27.5% (FY2015) and 6,922 / 50,984 = 13.6% (FY2026) - revenue mix, concentration, geography and market share. — FY2015-FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Dell Technologies' Forms 10-K and 10-Q, results releases, IDC data and market data; operands shown in the source line.
  3. ReportedWhat is inside is notebooks, desktops and workstations sold to companies, schools and governments, usually in fleets, often with support contracts and management tools, through Dell's direct sales force and its channel partners.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 1 business: history, customers, employees, channels and management. — FY2026 · publ. March 2026 · source ↗
  4. ReportedCommercial revenue was $28,754 million in fiscal 2015 and $26,006 million in fiscal 2017, rose to $45,576 million in fiscal 2022 and $45,556 million in fiscal 2023, fell 13% to $39,814 million in fiscal 2024, and recovered to $40,844 million and $44,062 million.
    Dell Technologies Form 10-K for fiscal 2017 - the EMC acquisition, its financing and purchase price, and results for fiscal 2015-2017. — FY2017 · publ. March 2017 · source ↗
  5. ReportedCommercial revenue was $28,754 million in fiscal 2015 and $26,006 million in fiscal 2017, rose to $45,576 million in fiscal 2022 and $45,556 million in fiscal 2023, fell 13% to $39,814 million in fiscal 2024, and recovered to $40,844 million and $44,062 million.
    Dell Technologies Form 10-K for fiscal 2024 - segment revenue and operating income for fiscal 2022-2024, headcount, and the VMware spin-off and Boomi sale. — FY2024 · publ. March 2024 · source ↗
  6. ReportedCommercial revenue was $28,754 million in fiscal 2015 and $26,006 million in fiscal 2017, rose to $45,576 million in fiscal 2022 and $45,556 million in fiscal 2023, fell 13% to $39,814 million in fiscal 2024, and recovered to $40,844 million and $44,062 million.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 1 business: history, customers, employees, channels and management. — FY2026 · publ. March 2026 · source ↗
  7. ReportedFiscal 2026 growth came "primarily due to an increase in units sold and richer configurations", meaning companies bought more machines and paid more for each.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 1 business: history, customers, employees, channels and management. — FY2026 · publ. March 2026 · source ↗
  8. ReportedProfitability is disclosed only for the whole client segment, which earned an operating margin of 5.6% in fiscal 2026, down from 6.1% and about 7.6% in fiscal 2024.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 7 MD&A and segment note: ISG and CSG revenue, operating income and drivers. — FY2026 · publ. March 2026 · source ↗
  9. ReportedThat is not far from the segment's margin a decade earlier, 5.2% in fiscal 2015 and 5.0% in fiscal 2017: PCs have always been a thin-margin business for Dell.
    Dell Technologies Form 10-K for fiscal 2017 - the EMC acquisition, its financing and purchase price, and results for fiscal 2015-2017. — FY2017 · publ. March 2017 · source ↗
  10. ReportedThe line sold $13,020 million in the first quarter and $13,192 million in the second, up 22%.
    Dell Technologies first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1. — Q1 FY2027 · publ. 28 May 2026 · source ↗
  11. ReportedThe line sold $13,020 million in the first quarter and $13,192 million in the second, up 22%.
    Dell Technologies second-quarter fiscal 2027 results release, Form 8-K exhibit 99.1 - segment results, AI orders and backlog, and full-year guidance - consolidated income statement. — Q2 FY2027 · publ. 1 September 2026 · source ↗
  12. Third-party estimateIDC recorded Dell's PC shipments down 5% in the same calendar quarter, so the growth was price and configuration, helped by memory costs passed on.
    IDC worldwide PC shipments, calendar Q2 2026, reported by MacTrast - Lenovo 24.4%, HP 19.1%, Dell 13.6% (9.3 million units, down 5%), Apple 9.9%; market 68.2 million units, down 4.9%. — Q2 2026 · publ. July 2026 · source ↗
  13. ReportedIDC recorded Dell's PC shipments down 5% in the same calendar quarter, so the growth was price and configuration, helped by memory costs passed on.
    Dell Technologies Form 10-Q for the quarter ended 31 July 2026 - remaining performance obligations, debt, deferred revenue, purchase obligations, share counts and risk disclosures. — Q2 FY2027 · publ. 8 September 2026 · source ↗
  14. ReportedThe outlook is a refresh cycle against a lengthening replacement cycle, which Dell's own filing flags.
    Dell Technologies Form 10-K for fiscal 2026 (year ended 30 January 2026) - Item 1A risk factors, supply, ownership and control. — FY2026 · publ. March 2026 · source ↗
  15. ReportedThe verdict for this line is steady rather than growing, and the number that would change it is annual revenue: above the fiscal 2022 peak of $45,576 million in fiscal 2027 would mean a genuine refresh; a fall back toward $40 billion would mean the recent growth was component inflation.
    Dell Technologies Form 10-K for fiscal 2024 - segment revenue and operating income for fiscal 2022-2024, headcount, and the VMware spin-off and Boomi sale. — FY2024 · publ. March 2024 · source ↗
Sources
Generated September 26, 2026