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Gadzoox Networks: Page 5 of 6

"This is definitely the beginning of the end now," says a market analyst who requested anonymity. "The problem is that the company was founded by tech people, but it missed the marketing aspects and lost the race for market share. It’s not surprising."

Jordan, the ex-Gadzoox employee, admits that in the early days there was a lot of pushing and pulling within the sales and marketing departments over which direction the company should take. But for at least the last year and a half, she says, Gadzoox has gone full-throttle after the OEMs.

And not everyone is buying Brocade switches exclusively. Compaq Computer Corp. (NYSE: CPQ) is a longstanding customer of Gadzoox, as well as a major OEM partner for its 2-Gbit/s platform. Foy says Gadzoox has had an OEM relationship in place with Hewlett-Packard Co. (NYSE: HWP) for several years for its hubs and switches, though not its Slingshot switches.

The good news, says IDC's Sheppard, is that Gadzoox has a good product and its relationship with Compaq seems to be stable. Foy says there are other major OEMs on the horizon, but he says that Gadzoox isn’t ready to reveal who they are.

Gadzoox is pinning its hopes for survival in large part on the entry-level area, which has to a large degree escaped Brocade’s attention, Foy says.