Navigating Hardware Refresh Cycles in the Data Center

Getting the timing right on hardware refresh cycles in the data center is both a science and an art. With so many considerations to weigh, the decision on when to pull the trigger is always a tricky call for companies and their data center asset managers.

Here’s our analysis of current approaches and trends around hardware refreshes in the data center.

Major Trendlines in Hardware Refresh Cycles 

Amid the accelerated growth of cloud computing in recent years, the on-premises data center is still alive and kicking—at least for now. But cloud investment remains the focus of attention. A recent report from Synergy Research showed huge growth in cloud expenditure, with hyperscale capacity set to triple in the next six years.

As cloud adoption soars, on-premises as a share of critical IT load will shrink. But the picture is not as dire as it may look for on-prem, despite it decreasing as percent of spend. In fact, the Uptime Institute concluded from its latest data center survey that on-prem data centers “remain foundational” for enterprises.

Unsurprisingly perhaps, businesses continue to rely on traditional data centers for their mission critical workloads, though most also incorporate the cloud as part of a hybrid architecture. According to Uptime’s 2025 survey, 45% of IT workloads are still on-prem, the same percentage as last year. Factors behind on-prem’s staying power include concerns over regulation, data sovereignty, and security.

All things considered, on-premises is here for the foreseeable future. This is despite the relentless (and highly successful) attempts by the cloud service providers to grow their market share.

Changing Attitudes toward Hardware Refreshes

It might be natural to think that the staying power of on-premises computing will drive more frequent hardware refreshes. Surely companies always want the latest and greatest technology to power their data centers? 

In fact, the opposite may be true. Refresh cycles are broadly lengthening rather than shortening. By 2022, the most common time between refreshes was five years, compared with three years in 2015. That represented a significant shift in a relatively short space of time, a shift which has since become entrenched.

So what’s driving this lengthening effect? Uptime Institute suggests that slow growth in power usage efficiency (PUE) for data center hardware has blunted a major incentive for more frequent server refreshes.

Average PUE plummeted from 2.5 in 2007 to 1.65 in 2014, but improvement has since slowed to a crawl, with an average PUE of 1.54 in 2025. As efficiency gains slow, so do the financial motivations for replacing already expensive hardware. Moore’s Law is delivering increasingly diminished returns.

Industry Arguments for Hardware Refresh

Unsurprisingly, enterprise vendors remain eager to push hardware upgrade cycles.

Take Dell, which — in a Forrester report it commissioned in 2022 — warned of the opportunity costs of not upgrading equipment in a timely fashion. The report found that 66% of respondents experienced an overall security risk-reduction by adopting a two-year refresh cycle. Accordingly, the authors argued that a two-year refresh was optimal for performance. The benefits in terms of security, employee experience, and sustainability “should lead to a more cost-effective device lifecycle overall,” they advised. 

Three years after the Forrester report, Dell is still making the case for timely server refreshes. The firm partnered with IDC on a whitepaper about how to “get ahead of your technical debt.” The report claims that 40% of organizations have refreshed more frequently since COVID-19, and that 44% upgrade their server infrastructure every three years or less.

Hyperscaler Refresh Cycles

While enterprise vendors like Dell advocate for more frequent refresh cycles, it’s important to watch what the hyperscalers are doing to properly gauge which way the wind is blowing. 

Consider Microsoft. It currently operates more than 4 million servers (and counting) across its massive data center portfolio—a huge amount of data center equipment by any measure. Formerly on a four-year refresh cycle, Microsoft CFO Amy Hood announced in 2022 that the firm would extend the life span of its servers to six years.

Equally telling is what Microsoft is doing with its retiring server hardware. In 2020, Microsoft committed to achieving a cloud hardware reuse rate of 100% by 2030. This is through a combination of repair management, reuse, and recycling. In 2024, the firm announced that they had passed the 90% reuse threshold a year ahead of schedule.

Cost savings has been an important strategic factor in the lengthening of refresh cycles. Google parent company Alphabet saved $3 billion in 2023 after switching to a six-year lifecycle. AWS also jumped on the six-year lifecycle bandwagon, which it expected to save almost $1 billion in the space of a quarter. However, as of 2025, AWS reverted its server lifecycle from six to five years. It also retired certain servers early, resulting in around $920 million in “accelerated depreciation” charges, reducing operating income.

Whatever the driving factor, this trend toward repair and reuse will not only further cement the 5-6 year time horizon around hardware refreshes. It will also support the ongoing expansion of a secondary market for used data center equipment that has been relatively peripheral to this point. Think of it as circular hardware.

Planning your Hardware Refresh

Let’s be clear: the upsides of well-planned technology refreshes are real. Although cloud adoption is more prevalent than ever, many businesses still rely upon on-prem storage for mission critical tasks. Even within the context of lengthening refresh cycles, that hardware needs to be replaced at some point so as not to miss out on performance gains.

There’s certainly a lot to consider when undergoing a hardware refresh. But don’t let that stand in your way. It makes sense to run a cost-benefit analysis against any proposed refresh. Questions to ask include:

• What are the performance and energy savings you expect to derive from the upgrade?
• Does your refresh plan sufficiently prepare your organization for future workload demands?
• What are the labor and capital costs associated with the work?
• How will you stage the work to minimize disruption to the operation?
• What is the value residing in the IT equipment you’re replacing?
• How can you strategically procure drives in order to offset the upfront costs of the upgrade?
• What equipment can you redeploy internally, and what can you decommission and earmark for secure remarketing? 

For hands-on support planning a hardware refresh in your data center, draw on the industry expertise of Horizon Technology and engage with a partner that knows how to make a difference on your behalf.