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Linux and notebooks boost Dell revenue

Rack-mount Penguins driving the business now, says vice chairman.

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Dell credited Linux servers and notebook sales for fuelling its revenue growth last quarter. However the OEM posted earnings $200m lower than expected, blaming lower demand in Europe and weaker Government sales.

The results show increases in revenue and earnings of 25 per cent and 5 per cent respectively for the quarter ending July 28th over the same period last year. Dell banked $7.67bn in this period. Chief Financial Officer James Schneider added that revenue in the UK had risen 30 per cent.

Vice chairman Kevin Rollins cited Toyota Motor Sales USA, which has installed 1400 of Dell's rack mount PowerApp.web server appliances running Red Hat Linux as an example of the Dell's born-again Linux momentum. Rack mounts now constitute a third of all server system sales he said, and "were pulling storage and service along with them." Dell said that enterprise systems and storage accounted for 49 per cent of its total system sales, a 46 per cent increase in revenue.

Linux is typically tarred with being a backroom infrastructure product, but as Rollins implied, businesses were moving the OS into the front line as they adopted distributed Internet computing models. He couldn't have been more diplomatic, but Rollins clearly pointed out that Dell's belated conversion to Linux was fuelling its growth and boosting other product lines, too.

By contrast Windows 2000 sales had been steady, but unspectacular: with "attach rates" increasing 2 per cent per month to 12 per cent of shipments last the end of last quarter.

Officials said that as notebooks were replaced at twice the rate of desktops, and had a far higher average selling price, mobile revenues had risen at a compound rate of 54 per cent over the past two years.

The company confirmed that memory supplies were tight. "With DRAM we should be able to manage our requirements adequately. We see tight component supply for rest of year - with memory to trend up," said Rollins. The company also said it will roll out more storage infrastructure, including Fibre Channel disk arrays, and NAS boxes later this year. ®

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