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Technology Industry

Back to normal - Networld+Interop 2001 - Industry Trend or Event

Communications News, June, 2001 by Ken Anderberg

Nearly all of us have a friend or relative who has been hit by the technology downturn. A friend of mine is among those unfortunates. A respected management consultant with years of international business experience, he decided to take an ownership position with an e-learning Web portal startup that his company had incubated.

Now, the e-learning company is going belly up. He was caught in what I call the "return to ROI basics" that enterprises have entered into during the current economic doldrums. His dot-com discovered that potential customers were in a wait-and-see mode on any technology expenditures that were not immediately necessary or did not promise a quick return on investment. E-learning did not offer either.

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That also was the message on the exhibit floor of Networld+Interop last month in Las Vegas. Companies that were providing their customers with essential technology and immediate ROI were the most optimistic. Those not offering either often were conspicuous by their absence.

Western, Multiplex, for example, just announced a first quarter revenue increase of 121% over the January to March 2000 period. The company's focus is on broadband wireless networks for enterprises and service providers. At N+I, CEO Amir Zoufonoun credited the ROI benefits of the firm's Gigabit Ethernet bridges as a major selling point for customers in such fields as healthcare and education. Wireless for building-to-building, high-speed connectivity is a low-cost, high-reliability option for such enterprises, he said.

Allied Telesyn Senior VP James Berthot offered that his company, which sells heavily to the educational market, is feeling some effects of the technology downturn but is staying profitable by concentrating on sales of essential products, as well as upgrades to current network systems. Customers are staying away from discretionary buys, he said.

Virtual private networks (VPNs) are driving sales at Check Point Software, said Leslie Stern, senior product marketing manager. VPNs have become an important product offering for enterprises with multiple locations requiring secure communication links. "It's a tough situation now for everyone, for everything," she said. "We're selling on ROI."

BreezeCOM, currently merging with wireless equipment vendor Floware, expects sales this year to be 40% to 50% higher than in 2000. That is the bad news, as the company doubled sales last year over 1999. The good news, said VP Yuval Goren, is that "everyone needs a solution," and the company's unlicensed, high-speed wireless products provide rapid implementation and early ROI over cabled options. The firm is focusing on the education, enterprise and service provider markets.

"We're growing at a much slower rate than anticipated," said Network Instruments President Douglas Smith at the company's N+I booth. That would be bad, except he still predicted 20% to 25% growth this year, vs. 50% in 2000. He noted that sales of the company's LAN protocol analyzers to larger companies will make up for a shortfall in sales to smaller customers.

Other N+I exhibitors--such as Spirent Communications, Agilent, e-Appliance, Qwest, CacheFlow, Entrada Networks, Compuware and Hypercom Network Systems--also were relatively upbeat about the current economy. All are offering either essential networking/communications products or services, or new products with an obvious ROI benefit.

So, while companies like my friend's dot-com, e-learning startup have become victims of the current economic correction, not everyone is feeling the same pain. The overall message customers have sent vendors is that they will hold onto their IT budgets for the time being---except for upgrades of essential network equipment and products with attractive ROI components.

kena@comnews.com

Technology Industry

Back to normal - Networld+Interop 2001 - Industry Trend or Event

Communications News, June, 2001 by Ken Anderberg

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