The network industry will convene this week at its largest trade show and conference under the pall of lowered IT spending amid a bearish economy.
Interop will kick off in glitzy Las Vegas as some users scale back major projects and vendors lower financial guidance for 2008 as the nation girds for a recession. IT spending has already reached recessionary levels, according to research firm ChangeWave; and the stock prices of companies like Cisco and Foundry Networks have been downgraded by some investment firms in light of lowered spending's affects on revenue and earnings.
"We knew that things were really moving into a bad place several quarters ago," says Paul Carton, research director at ChangeWave. "But it actually turned negative [in] February."
A ChangeWave survey of 2,013 officials in charge of IT spending at their organizations found that 23 percent expect their company's spending to decrease in the second quarter of 2008, while 15 percent expect it to increase. Last year, the firm found that 32 percent expected an increase while 12 percent expected a decrease.
ChangeWave says this is the first time since August 2001 that one of its surveys -- taken at the midpoint of each quarter -- projected negative spending growth in IT.
Vendors are feeling the impact of lowered spending on their top- and bottom-line growth. Cisco was downgraded by UBS Warburg earlier this month on slowing orders and softness in both the United States and European enterprise markets. And Foundry was downgraded by Collins Stewart less than three weeks ago on weak enterprise spending. Extreme was downgraded by JMP Securities.
But any gloom is not going to spoil a good party. Interop officials say attendance is up 25 percent from last year and that scores of vendors will be making significant announcements at the event.
Foundry is unveiling a 16-port 10 Gigabit Ethernet module for its BigIron RX datacenter switch for high-density connectivity of servers and storage devices. The module brings the BigIron RX switch's 10G density to 512 ports, which Foundry claims is double the 10G density of competitive datacenter switches from Cisco and Force10, and quadruple the packet-per-second performance.
Foundry is also unveiling a 48-port Gigabit Ethernet module for its NetIron MLX router that's designed to increase server aggregation and reduce the number of network elements in a datacenter. The module more that doubles the Gigabit Ethernet density of MLX-32, from 640 ports to 1,536.
The BigIron 16-port 10G Ethernet module costs $35,000 and will ship in August. The MLX 48-port Gigabit Ethernet module also costs $35,000 and will ship in the fourth quarter.