Channel Tracker's Enterprise Storage and Switches Report
Better Than Expected in U.S.; Weaker Than Expected in Europe

BERKELEY, Calif. (January 24, 2003) -- Global Touch, Inc.® one of high-tech industry's foremost channel consulting firms, announced today results of its quarterly Channel Tracker™ report focusing on enterprise storage and switches. This edition reports on enterprise storage and switches product sales in the indirect channel in the U.S. and European for the quarter ending December 31, 2002. The results provide a "snap shot" of enterprise storage and switches product demand, sell through, sales, pricing, gross margins, vendor performance, forward quarter sales prediction, forward revenue plans, forward pricing estimates, changes to customer budgets, and normalized customer spending rate in both the United States and Europe.

"It was another tough quarter for most enterprise storage and switches companies and their channel partners in the U.S. In Europe, it was particularly brutal due to the mixed economic conditions across the region," stated Denise Sangster, President & CEO of Global Touch, Inc.

The data for the Enterprise Storage and Switches edition of the Channel Tracker report was collected from participants during the last two weeks in December 2002. It focuses on sales in the 4th calendar quarter (October 1 to December 30, 2002). Key vendors tracked in this survey include Brocade, EMC, Hewlett-Packard, Hitachi Data Systems, IBM, Network Appliance, Snap Appliance, and Sun Microsystems. This is the tenth quarterly issue of the Enterprise Storage and Switches edition of Channel Tracker.

The Big Enterprise Storage and Switches Picture. "The enterprise storage and switches market experienced better than expected U.S. sales, but weaker than expected European sales," stated Sangster.

54 percent of U.S. respondents predict enterprise storage and switches sales will accelerate in the H2:03 or 2004 or later. 78 percent of European respondents predict enterprise storage and switches sales will accelerate in CQ2:03 or the H2:03. "The question that no one wants to discuss is, what will happen if volumes continue to fall or remain flat through at least the first half or all of 2003?"

Enterprise Storage and Switches Revenue Growth. 75 percent of U.S. respondents indicated that enterprise storage and switches equipment sales were in-line with expectations. 62 percent of European respondents indicated that the quarter was below-to-extremely below sales expectations. (See Terminology Explanation at the end of this press release, below.)

Sequential Quarter Revenue Growth. In a sequential quarter revenue growth comparison (CQ4:02 compared to CQ3:02), U.S. respondents indicated that sales of HP, IBM, Snap, and Sun were in-line or in-line-to-ahead of expectations. Brocade, EMC, Hitachi Data Systems, and Network Appliance were below-to-extremely below expectations.

European respondents indicated that sales for Brocade, HP, Hitachi Data Systems, and Snap were in-line or in-line-to-ahead of expectations. IBM, Network Appliance, and Sun were below-to-extremely below or extremely below expectations. EMC was nearly evenly split, with 50 percent indicating sales in-line-to-ahead of expectations.

Next Quarter's Revenue Growth Prediction. U.S. respondents predict mixed enterprise storage and switches sales in the forward three months compared to the same period in 2002 (CQ1:03 vs. CQ1:02). Respondents predict strong or moderate-to-strong growth in CQ1:03 compared to CQ1:02 for Brocade, EMC, HP, and Snap. Predicted sales for Hitachi Data Systems, IBM, Network Appliance, and Sun are moderate-to-flat.

2003 Revenue Plans. 59 percent of U.S. respondents predict lower 2003 revenues in comparison to 2002 for enterprise storage and switches sales, but will re-evaluate H2:03 revenues in Spring 2003. 46 percent of US respondents expect 2 percent to 4 percent normalized revenue growth rate in 2003 for enterprise storage and switches products. 43 percent of respondents expect 0 percent to 1 percent growth rate.

European respondents are mixed. 39 percent predict higher 2003 revenues in comparison to 2002 revenues for networking equipment sales. 32 percent predict 5 percent to 8 percent growth, while 35 percent predict 2 percent to 4 percent normalized revenue growth rate.

General Information.
Global Touch's next report is the Channel Pulse edition of Channel Tracker covering Mid-Quarter 1:03. It is scheduled for release by the seventh week of the quarter. Other focused Channel Tracker reports are available on the Global Touch website (http://www.globaltouch.com).

The complete CQ4 2002 Enterprise Storage and Switches Equipment edition of Channel Tracker report, including charts that reflect the key data, is available online at the Global Touch Web site (http://www.globaltouch.com/networking/) or, by e-mailing globaltouch@globaltouch.com. The report contains all of the survey results for both the U.S. and Europe including specific information on key industry vendors. Details of the survey's methodology and respondents are included in the report.

Subscription Pricing.
Channel Tracker can be purchased from Global Touch at $399 (USD) per issue. A four-quarter subscription is $1,436.00 .

About Channel Tracker.
In June of 1999, Global Touch, Inc.® launched, in association with the Morgan Stanley Technology Group, the quarterly Channel Trackerä. Today, the Channel Tracker is a quarterly benchmarking service designed to capture the pulse of the information technology channels. This is the first service to simultaneously capture U.S. and European data and report findings as calendar quarters are closing. The results are a "snap shot" of enterprise storage and switches products demand, sell through, sales, pricing, gross margins, vendor performance, forward quarter sales prediction, forward revenue plans, forward pricing estimates, changes to customer budgets, and normalized customer spending rate in both the United States and Europe.

Terminology Explanation.
The following is a summary of terminology used in this press release:

• Table No. 1:
  • Ahead of Expectations: 6%+ Above Plan
  • In-Line with Expectations: 1% to 5% Above Plan
  • Below Expectations: 1% to 10% Below Plan; and
  • Extremely Below Expectations: 11%+ Below Plan.
• General References:
  • CQ4:01: Fourth Calendar Quarter (October 1 to December 31) 2001;
  • CQ1:02: First Calendar Quarter (January 1 to March 31) 2002;
  • CQ2:02: Second Calendar Quarter (April 1 to June 30) 2002;
  • CQ3:02: Third Calendar Quarter (July 1 to September 30) 2002;
  • CQ4:02: Fourth Calendar Quarter (October 1 to December 31) 2002; and
  • CQ1:03: First Calendar Quarter (January 1 to March 31) 2003.

About Global Touch.
Global Touch® is a premier global channel consultancy company serving the information technology industry. Its expertise is in developing leveraged sales models and strategic partnerships that help shorten or re-engineer the path to sustainable revenue streams.

Based in Berkeley, California, its approach is built on extensive global experience, in-depth market research and information resources, and a worldwide network of industry contacts. Since 1989, its "insider" knowledge, rigorous analysis, and unconventional insights have helped build winning strategies, partnerships, and solutions that have generated millions of dollars in benefits and ROI to our clients' bottom line.

From 1993 until 2000, the company produced EuroChannels, recognized as Europe's leading channel conference for senior-level computer industry executives. The company also hosted CyberChannels and the EuroProduct ConneXion prior to selling its conference business to Smith, Bucklin & Associates in summer 2000.

For more information on Global Touch and its products and services, visit the company's Web site at www.globaltouch.com or contact the company via e-mail at globaltouch@globaltouch.com or by telephone at +1-510-649-1100.

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