2009 IT Enterprise Infrastructure Spending

In the large IT enterprise infrastructure sector(*1) we are entering the 2009 IT budget planning period. We have some early indications of 2009 IT spending. Indications are gathered from on going infrastructure “right sizing” meetings, RFI’s, RFP’s and RFQ’s coupled with long term client priorities and interests. In a presidential election year, we have seen delays in firm budgetary commitments until presidential elections are over. In addition, the current state of the US and global financial crises further challenges us in our predictions. As mentioned previously, many clients are simply hovering with IT spending decisions. However, despite the aforementioned we do have some thoughts on present behavior and 2009 IT enterprise infrastructure budgets.


For us, Network Infrastructure demands are presently steady favoring Cisco and Juniper and will continue to have steady slow growth for the rest of the year and into the first half of 2009. An average of a 2 to 4% qrt over qrt growth for us.


Converged communications initiatives have slowed and will continue to slow into 2009. We expect VoIP and converged communication sales to be flat for at least the first half of 2009.


Enterprise Storage solutions and products will be flat for the remainder of the year and at this time the first half of 2009 will see a slight increase in raw disk sales. Stronger and exceptional performance has been seen and will continue to be seen in the area of De-Duplication. One of the few technologies that provide a measurable ROI. Data Domain continues in the lead however I do feel they have NOT prepared sufficiently for the continued competitive pressures from EMC, Network Appliances, Symantec, and others. Representation (feet on the street) for Data Domain, direct and indirect (partners), needs to grow significantly to fend off the larger vendors.


End users are squeezing vendors and their partners hard on HW/SW costs. In addition, clients expect additional incentives. This includes dramatic price cuts on maintenance agreements, installation services and on going support. There has also been an increase in request for extended credit terms. Payment terms in the 45 to 60 and even 90 day range are not uncommon. As a result even though gross revenue continues to be steady, net income has shrunk for vendors, SI’s, and resellers.


As of this time, we expect 2009’s first half to be flat. For the second half of 2009 we are optimistic expecting moderate growth.

M.H. Fizz
FCI

Comments on this blog are specific to our narrowed observations in North America and are specific to our exposure and resulting interpretations. Comments are not predictions of any general technology sector or specific vendor’s performance. It would be irresponsible for readers to make decisions based on our comments and opinions. They reflect only our own unique experiences and exposure to vendors, clients and the industry.


(*1)
The IT enterprise infrastructure sector is defined as enterprise server, enterprise networking and enterprise storage products and solutions as well as those technologies that are abutted against and entwined within. ie WOC (wan optimization controller) technologies, de-duplication technologies, server and storage virtualization,.. etc.

Network Vendor Comparison Study Results

Next client conference scheduled for 11/05/2008.

FCI Comparison Study includes SI/ReSeller Pre/Post Sales Support Ratings, Client Pre/Post Support Ratings, Product Quality, Market Share Comparison, Perceived Market Influence, Sales Trends, Expected Performance.

Reviews will include but will not be limited to:

• Cisco
• Juniper
• Foundry
• Nortel
• 3Com
• Avaya

We will also review present WOC demand and trends including the recent Bluecoat/Packeteer challenges.

Our present SI Client Performance and Outlook

2008 Q2 to Q3 Forecast: -0.49% Actual: -1.27%
2008 Q3 to Q4 Forecast: 1.86% Actual: Available after Dec31

We may adjust this forecast on 10/15/2008. Clients are presently hovering versus making a decision to purchase or cancel orders. The financial vertical is the worst for us with small pockets of exceptions. Our Q3 to Q4 forecast is the weakest in the last for years.