Cisco, Nortel, Riverbed, Isilon, Symantec, and LSI all beat their Wall St. numbers last quarter. LSI's CEO Abhi Talwalkar stated, "Stronger than expected sales of our SAS and SAN silicon partially offset the effects of normal seasonality while the longer-term benefits of our strategic steps and sharp focus on storage and networking continued to grow." LSI supplies those who supply IT.
Sun's numbers, of course, were exactly opposite, but they tend to be contrarian in general. Their numbers were "stunningly bad" according to the young ESGer who tracks them.
It is clear to me that the buying spree is over, but that companies continue to invest into technologies required to keep them competitive and even accelerate their leads. Smart companies spend in downturns – they just spend smarter.
I'm ok with people being smarter as a general rule. If budgets continue to get tight it forces better use of those budgets or exposes that we were in processes of solving problems that perhaps didn't need to be solved. It's like spending $14 million on a conduit system for the Big Dig so cell phone companies could put their gear into it – only to find out those companies would rather just run lines the old fashioned way – or perhaps like giving Matt Ryan a $32 Million dollar guaranteed salary (the highest ever) before he ever takes a professional snap as a football player simply because his agent (salesman) made the ownership somehow panic that without giving Matt the dough they would somehow end up repeating their Michael Vick fiasco. The point is, people who have way too much money to spend on way too insignificant issues may be a salespersons' best pal, but it doesn't tend to drive sustainable business behavior.
What's the number one reason IT buyers pick one vendor/solution over another when scrutiny is high? It's marketing and psychology. Pressure mounts when you're under the microscope, so buyers make what appears to be the most practical choice to have the most possible impact on the most visible elements of a problem. If the answer is "I have no money" like in 2001, then cheap wins. If the answer is "I'm not going to be an idiot" as it appears to be in 2008, then the winners are proving to be those with the clearest articulation of value. They market clearly and concisely into a known problem area. Folks getting squeezed don't buy based on brand recognition or high-level abstract campaigns if they have tactical problems to solve.
The moral for you all is simple – say what you mean and mean what you say – all the rest is noise and buyers can't afford the time or effort to decipher whether or not you might have a solution to their problem based on the fact that you are a staunch proponent of free love and are firmly against dumping toxic nuclear waste behind school houses.
Hi Steve,
I enjoy reading your blog a great deal - there are also others in Storage segment that I like e.g. Dave Hitz (NTAP), Mark Lewis (EMC) etc. Do you know any good bloggers in Network industry (esp Switching) from Cisco, Juniper, Extreme, etc.
Thanks
Posted by: Armen Hovanessian | May 22, 2008 at 03:37 PM