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Gadzoox's hopes in storage network switch

The struggling company will announce a critical new product Monday, a switch for storage networks that closes the gap between competitors' technology.

Struggling Gadzoox Networks will announce a critical new product Monday, a switch for storage networks that closes the gap between competitors' technology.

Gadzoox makes equipment that lets companies build special-purpose storage area networks (SANs) using the Fibre Channel communications standard. But recent market conditions have shaken the company.

Slowing sales led the company to announce Thursday it won't meet revenue projections for the quarter ended March 31. The company also took belt-tightening measures, announcing an immediate layoff of 10 percent of the work force and a program to cut expenses 20 percent, which will take effect in the next quarter.

The company named a new chief executive and other top brass last year after it had to restate earnings.

Gadzoox's products until now have been built around an earlier version of Fibre Channel technology in which all storage devices and servers share the same data transfer path. Market-leading Brocade and other competitors such as QLogic, McData and Vixel have moved on to "fabric" switches that set up faster dedicated connections between any two devices.

"It's pretty clear that Brocade is in the position they're in now because the market wanted the switch," not the older "loop" technology Gadzoox supported, Illuminata analyst John Webster said. Webster puts Gadzoox in the same category as QLogic and Vixel, companies that simply haven't been able to break Brocade's lock.

But Clark Foy, vice president of marketing at Gadzoox, points out that SANs are still a relatively young business. SANs, while long billed as a painkiller for storage headaches, have proven expensive and complicated to install and manage and therefore have penetrated only a small fraction of the potential customer base. Gadzoox is betting that a new round of emerging SAN standards will improve the situation and that Gadzoox will benefit accordingly.

"Being successful with this switch is the next critical stage for this company," Foy said. "There have been a lot of changes internally, but we've stabilized."

The new Slingshot switch will be available Monday for other companies to resell under their own names, Foy said. Gadzoox will start selling it under its name this summer.

Though prices haven't been announced, the 18-port device will cost less than $18,000. The Slingshot 4218 is a rack-mountable device 1.75 inches thick--a measurement known as 1U and the thinnest used when bolting equipment to racks.

It can sense whether devices plugged into its ports communicate with the current 1 gigabit-per-second Fibre Channel standard or the new 2 gigabit-per-second version, Foy said.