There are lucrative sweet spots.

Implications: 1) Due diligence is expected and the news of tightening belts was predicted. 2) In the last quarter we have found all verticals are experiencing some level of conservative spending. 3) However, we have also seen increased spending with some vendors and/or specific vendor products and solutions.  There are profits to be made during these next few quarters.  

Analysis: Anyone in this technology sector knew the slow down was coming and would be felt across all sectors.  In the large enterprise arena we did experience a very slow first quarter but the second quarter has stabilized.  We do however expect lower margins for vendor products especially the larger vendors such as Cisco, EMC, IBM, etc.

However we have had stable and even increased spending in the following technologies:  DeDuplication, Wan Optimization, Virtualization.  We expect slowed growth compared to previous periods in these areas but we DO expect qrt over qrt sequential growth.  All have matured to technologies that can prove an ROI and could help to reduce costs long term.  Niche vendors that may benefit: Data Domain, Riverbed, VMware AND their competition.  Larger vendors such as Cisco may suffer slow downs but some of their areas will also grow.  The same holds true for larger vendors such as Sun, NetApp, and others with specific products maintaining demand. 

As of this reply the 2nd quarter 2008 looks stable.  We expect the 3rd qrt to be flat or perhaps dip slightly and we expect the last qrt of 2008 to pick up again.  I do not see this changing unless there is a unexpected global crisis.  We agree that we are in the middle of a IT spending slow down however we also are experiencing some areas of growth and for systems integrators strategic in vendor partnering and client leveraging we will profitably weather this economic storm.