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Brocade Sparks Latest Market Scare: Page 3 of 4

Others confirm this view. "We don't see any slowdown in demand for SANs," says Jon Oltsik, VP of corporate marketing at GiantLoop Network Inc., a privately held startup. As a supplier of metropolitan networking services, GiantLoop says a majority of its business is linking SANs in cities.

Oltsik acknowledges, though, that businesses may have big SAN plans, but no pocketbook to match. "We see people doing more homework before buying, and they're examining their options. People in general are spooked, and there's a general hesitation," he says. But at the same time, he asserts that many customers are on track with "aggressive" infrastructure and application rollout plans.

During last night's conference call, analysts seemed concerned that Brocade might be too optimistic about a pickup of business during the second half of this year. Some also seemed concerned that Brocade, by its own admission, relies on just seven customers for about 80 percent of its business.

But Brocade seemed confident of its plans. Executives say the company's new products, including 64-port and 128-port Fibre Channel fabric switches and the addition of 2-Gbit/s capabilities across its product line, are on track for delivery. International sales are up, and Brocade's finalized a reseller arrangement with Sun Microsystems Inc. (Nasdaq: SUNW). All this, execs said, added to specific customer commitments the company does know about for later this year, will ensure it can meet its figures.

CEO Reyes also waxed optimistic on the SAN market in general. He cited figures from Dataquest that indicate SANs will comprise 80 percent of a $50 billion external storage market by 2004. What's more, he thinks the year 2001 will mark a turning point, in which businesses start to realize that SANs are "among the most strategic IT investments of the decade."