Attacking Cisco's router strength

Electronic News, Feb 2, 1998 by Carolyn Whelan

Washington, D.C.--The battle to dominate in the network market rages on, with makers of powerful and cost effective switch routers poised to edge in on Cisco's router stronghold as new opportunities--and technologies--for voice and video on the network unfold. And acquisitions have proven key to getting those new networking technologies out quickly.

Switch routers, or layer 3 switches, implement ASICs in a Gigabit Ethernet system to accomplish more cheaply what routers do through CPU and software. Software-based routers, while richly featured, are slow and unable to address latency and quality of service issues.

Amid the array of technologies that companies can choose among for voice-over Internet Protocol (IP)--ATM, Gigabit Ethernet, cable modems, FDDI frame relay and ADSL-- most networking companies--and analysts--are leaning toward Gigabit Ethernet switch routers over ATM. Analysts believe that Gigabit Ethernet will win out in corporate LAN backbones because Gigabit Ethernet is cheaper and easier to upgrade from Fast Ethernet, while Frame Relay includes more ATM like features. That trend may have networking giant Cisco worried, since it has no immediate plans to release a switch router. Cisco currently controls more than half the routing market.

Networking giant Cabletron finally entered the switch router market last week with its SmartSwitch Router, a layer 3 gigabit switch which stems from its latest acquisition, Yago.

Meanwhile, 3Com and Cisco are taking different tacks. Cisco is systematically implementing a 5-phase strategy for integrating voice, data and video by focusing on wide-area network products that it says are superior to layer three switches, while 3Com forges ties with major networking vendors to speed delivery of its offerings in that space.

Data, voice and video integration is popular today due to promises of lower costs, higher performance, new applications, and more manageable networks. The demand for more bandwidth and better connectivity, in turn, is putting tremendous pressure on traditional routers, which lack the required gigabit and latency performance. Industry watchers believe that multiservice networks will be the primary medium for business communications over the next four years.

Layer 3 moves data among applications and users, and brings better voice and video quality than layer 2, which is used by traditional routers. Switch routers are also more powerful than routers and are set to sell more due to the current popularity of switches, which are selling faster than routers.

Dataquest cites switch-router speeds five times that of routers at one third the price. On average, a Cisco Router is priced at $100,000 while a 3Com layer product sells for $30,000. That explains why nearly half of all sites currently using backbone routers plan to integrate switch routers in the next two years, according to a recent Dataquest end-user survey. Dataquest projects the market for switch routers to reach $2.2 billion by the year 2000.

Cabletron said traditional routers haven't changed in 15 years, and have actually gone up in price. The company also called the switch router market the "most heavily invested technology to date."

Said More Manageable

The company's newly released SmartSwitch Router, the company said, is also more manageable, accountable and scalable, and has a lower total cost of ownership. By combining wire-speed performance with full-function routing features, the SmartSwitch Router allows companies to construct networks in a new way, to handle changing applications on Intranets and the Web, multiprotocols, and accelerated voice and video over the Internet, says Cabletron. The company cites speeds of 15-30 million packets-per-second and a capacity of 250,000 routers, which it said is 100 times that of 3Com's offerings.

Ultimately, Cabletron's goal with the SmartSwitch Router is to make it 1/10th the price per port and 100 times faster than traditional routers. Right now the SmartSwitch is priced at $500 per port, compared to $8,000 for a traditional router. Cabletron said its Smartswitch Routers sell for 20-33 percent less than similar offerings from 3Com, Bay, Extreme and Foundry, and are priced 93 percent lower than Cisco's 7500 switch.

The arrival of Yago after Cabletron's $430 million acquisition of Digital's Network Products business and restructuring announcements last month, will help it focus on the enterprise and Internet Service Provider markets.

Yago and the SmartSwitch Router now sit within Digital's Network Products business, which, the group said, complements its IP routing, which uses 100,000 packets per second. The SmartSwitch Router will be available in April.

Cabletron CEO Donald Reed, only hired in August, said that he is looking to make more acquisitions to bolster the company's technology lineup and customer base.

Historically, startups have been more successful with Gigabit Ethernet technology development, because of their small clientele and work with ASICs rather than standard chips. Many, including Granite Systems, Rapid Communications and Prominet were gobbled up last year by Networking giants. Analysts foresee further consolidation this year. (EN, 5 Jan.)