2026 Category Breakdown

IT Hardware Budget Allocation

IT hardware accounts for 15 to 20 percent of total IT spend in 2026, down from 30 to 35 percent a decade ago. End-user devices dominate the spend at $1,200 to $2,500 per employee per year. Servers and storage have shrunk dramatically as cloud has taken over general-purpose computing.

% of IT Budget

15 - 20%

Down from 30-35 percent a decade ago

Per Employee

$1,200 - $2,500

All-in hardware cost per employee per year

Refresh Cycle

4 - 5 yr

Standard for laptops; 5-7 yr for networking

Hardware Sub-Line Allocation

Within the hardware bucket, end-user devices (laptops, monitors, peripherals) dominate at 55-65 percent. Mobile phones, networking and servers each take much smaller shares than they did in 2015. Per-employee figures below are for a representative knowledge-worker company; manufacturing, retail and other industries with significant non-knowledge-work staff have very different patterns.

Sub-line	% of Hardware Budget	Per Employee	Notes
End-user devices (laptop, monitor, peripherals)	55-65%	$700 - $1,200/yr	Largest sub-line. Apple, Dell, Lenovo, HP. Refresh 3-4 years.
Mobile phones	10-18%	$150 - $400/yr	If company-provided. Apple iPhone, Samsung Galaxy. Refresh 2-3 years. BYOD reduces this line.
Networking equipment	8-15%	$150 - $400/yr	Switches, APs, firewalls, routers. Per-site rather than per-employee.
Servers and storage	8-18%	$100 - $500/yr	Shrinking. Cloud has displaced most general-purpose on-prem. Specialty workloads remain on-prem.
Conference room and AV	3-6%	$50 - $150/yr	Logitech, Poly, Cisco, Crestron. Hybrid-work driven, growing post-pandemic.
Other (printers, kiosks, special-purpose)	2-5%	$30 - $100/yr	Declining as paper use drops, but not zero.

Sub-line ranges from Gartner IT Key Metrics Data, IDC Quarterly PC Tracker, and Computer Economics annual benchmark surveys.

End-User Device Cost Per Employee

The end-user device line is the part of the hardware budget most CIOs spend most time managing. The table below shows typical purchase costs and amortised lifetime costs for the dominant device categories in 2026. Lifetime cost includes the device, refresh, repair allowance and standard accessories.

Device	Purchase Price	Amortised Per Year	Notes
Standard Windows laptop (knowledge worker)	$1,200 - $1,800	$400 - $600/yr	Dell Latitude, Lenovo ThinkPad, HP EliteBook. 4-year refresh.
Premium Windows laptop (manager/specialist)	$1,800 - $2,800	$500 - $800/yr	Higher specs, premium build. 4-year refresh.
Standard MacBook Air	$1,200 - $1,800	$400 - $600/yr	Marketing, design, executive use. 4-year refresh.
MacBook Pro (engineering)	$2,500 - $4,500	$800 - $1,500/yr	Engineering, video editing. Often 3-year refresh because workloads stress the device.
External monitor (24-27" QHD)	$200 - $500	$30 - $80/yr	Dell, LG, BenQ. 5-7 year refresh.
Dock plus peripherals	$200 - $400	$40 - $80/yr	USB-C dock, keyboard, mouse, headset. Often refreshed with laptop.
Mobile phone (iPhone Pro / Samsung S-series)	$1,000 - $1,400	$350 - $500/yr	Plus carrier line $30-$80/mo. Refresh every 2-3 years.

Hardware Spend by Industry

Hardware as a share of IT spend varies significantly by industry. Manufacturing and retail run high because of physical infrastructure (POS, OT equipment, factory devices). Cloud-native businesses run very low. The table below is the typical 2026 pattern.

Industry	Hardware as % of IT	Notes
Manufacturing	22 - 28%	OT equipment, plant networking, ruggedised devices, scanners.
Retail	18 - 25%	POS terminals, store networking, scanners, in-store devices.
Healthcare	15 - 22%	Workstations on wheels (WoW), tablets, biomedical equipment integration.
Financial services	10 - 16%	High-spec trader workstations, ATM estate (banks), branch networking.
Professional services	12 - 18%	Standard knowledge-worker hardware, multi-office networking.
SaaS / technology	5 - 10%	Premium engineering laptops, almost no on-prem servers.
Education	18 - 28%	Student devices, classroom AV, campus networking.

The Server Decline (and Where Hardware Still Matters)

On-premise server hardware spend has shrunk dramatically over the last decade. Gartner's 2026 IT spending forecast shows global data centre systems growing again at 19 percent, but this growth is concentrated in hyperscaler buildout for AI infrastructure rather than enterprise data centres. For typical mid-market enterprises, on-premise server spend has been flat or declining since 2018.

Where on-premise hardware still makes sense in 2026:

Latency-sensitive applications. High-frequency trading, real-time control systems, edge inference for manufacturing or healthcare. Cloud round-trip latency is too high.
Predictable steady-state workloads. Internal databases or compute that runs at constant 60-90 percent utilisation 24x7 can be cheaper to own than to rent. Reserved cloud instances narrow the gap, but bare-metal can still win.
Data sovereignty or air-gap requirements. Defence, classified workloads, certain healthcare datasets, regions without compliant cloud providers.
Specialised hardware. GPU-heavy AI training (though most of this has moved to cloud too), HPC clusters, FPGA-accelerated compute.

Outside these specific cases, the default for new general-purpose workloads in 2026 is cloud. The on-premise server estate at most enterprises is in managed decline.

Software vs Hardware

Why software is now 70 percent of IT budget.

CapEx vs OpEx

Hardware is what is left of the CapEx side.

Cloud Spending

Where the server budget went.

Managed Services Cost

Outsourcing the hardware estate.

Full Budget Breakdown

Five-category allocation context.

Manufacturing IT Budget

Hardware-heavy industry, 22-28 percent of IT.

Calculate your hardware budget share

The calculator shows hardware as a category line within your full IT budget breakdown.

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Frequently Asked Questions

How much should IT hardware be of total IT budget?

IT hardware accounts for 15 to 20 percent of total IT spend in 2026, down from 30 to 35 percent a decade ago. The decline reflects the shift from on-premise infrastructure (servers, storage, networking gear depreciated as CapEx) to cloud (consumed as OpEx). End-user devices have remained relatively stable as a share, while data centre hardware has shrunk significantly. The figure is higher in industries with large physical footprints (manufacturing 22-28 percent, retail 18-25 percent) and lower in cloud-native businesses (SaaS 5-10 percent).

What does an employee laptop cost a company?

Total cost per employee for an end-user computing device runs $1,200 to $2,500 per year fully loaded. The breakdown: laptop $400-$700/year (3-4 year refresh of a $1,500-$2,500 device), monitor $80-$150/year, peripherals (keyboard, mouse, headset, dock) $50-$100/year, mobile phone (if provided) $300-$700/year, plus a security and management tooling layer ($150-$400/year). Apple devices typically run 30-50 percent more than Windows. Engineering teams often have higher-spec machines ($3,000-$5,000+ devices) and refresh more frequently.

What is the typical hardware refresh cycle?

Laptops and desktops typically refresh on a 3-5 year cycle. The most common pattern is 4 years, which balances depreciation tax treatment (most jurisdictions allow 3-5 year depreciation), warranty coverage, and operating system support windows. Mobile phones (if company-provided) refresh every 2-3 years. Servers refresh every 4-6 years. Networking gear (switches, access points, firewalls) refresh every 5-7 years, sometimes longer if the manufacturer continues firmware support. Monitors refresh every 5-7 years.

What is the cost of a corporate server in 2026?

On-premise servers have become a smaller line for most companies. A typical mid-range rack server (2-socket, 64-128 cores, 256-512GB RAM, NVMe storage) costs $8,000 to $25,000 to purchase, $2,000 to $4,000 per year to operate (power, cooling, maintenance contract), and depreciates over 4-5 years. Hyperconverged infrastructure (Nutanix, VxRail, Cisco HyperFlex) costs more per node but reduces operational complexity. For most workloads, public cloud is now cheaper for general-purpose computing once you factor in the operational overhead of an on-premise server estate.

Should we buy laptops outright or use Device-as-a-Service (DaaS)?

DaaS (HP Workforce Solutions, Lenovo Device-as-a-Service, Apple Business Manager financing) bundles hardware, configuration, deployment, support and end-of-life into a per-device monthly fee, typically $50 to $120 per device per month for a Windows laptop. The advantages: predictable OpEx accounting, hardware refresh built in, less internal device management overhead. The disadvantages: 15-30 percent premium over outright purchase total cost, contract lock-in, less flexibility for specs. DaaS is most attractive for companies with 100-500 employees that lack mature IT operations or want to convert CapEx to OpEx.

What is the typical networking hardware spend?

Networking hardware (switches, access points, firewalls, routers) typically runs 1.5 to 3 percent of total IT budget, or $150 to $400 per employee per year. The cost is driven by office and site count more than headcount. A single office of 100 people might run $80,000 to $150,000 in networking gear depreciated over 5-7 years. A 20-site retailer or manufacturer with 100 employees per site spends multiples because each site needs its own network stack. Cisco Meraki, Aruba, Ubiquiti, Fortinet and Palo Alto are the dominant vendors for enterprise networking in 2026.