Load-Balancing Devices Grow Up

But as the economy stood still, networking hardware vendors moved forward with advances in the traffic management hardware space, often segmented as Layer 4-7 networking devices. Load balancers became Web switches, then content switches and have now morphed into application switches.

Then, as enterprise clients became more distributed and security became more of a top concern, vendors added Layer 7 features, giving the devices the ability to look deep within a packet to prioritize traffic based on the application. Deep packet inspection also gives the devices the ability to block harmful traffic such as worms, adding network security to the list of benefits.

"At this point, Layer 4 load balancing is a commodity, so there is a consolidation of features on Layer 4-7 devices," said Erik Giesa, director of product management at F5 Networks, Seattle. "It's a reflection of customer desires. Customers want fewer devices in their networks, so we're going down that path."

Pat Patterson, director of marketing for Nortel Networks' Alteon switches, concurred. "The capability to look deep within the packet has opened opportunities beyond even security," he said. "By adding the capability to look into the application layer, we can increase application availability by load-balancing application servers as you would Web servers in the past."

And while Layer 4-7 switch vendors have been loading features onto their boxes, a second set of smaller players, including Packeteer and Allot Communications, has focused on WAN traffic management, offering appliances that encrypt and compress traffic, thus speeding up networks and dramatically reducing bandwidth requirements.

While companies can offer compelling ROI scenarios with bandwidth savings, the most compelling driver for the WAN traffic management devices right now is the recording industry's pressure to stop music file-swapping, solution providers report.

"We are seeing quite of bit of interest from universities and ISPs since the recording industry started threatening lawsuits," said Jeff Schreiber, director of sales and marketing at Infoview Systems, a Livonia, Mich., solution provider and Allot partner. "We can not only identify that traffic, we can simply shut it down."

Anthony Tanzi, a systems engineer with Atrion Communications Resources, a Branchburg, N.J., solution provider and Packeteer partner, said the bulk of that business right now is coming from universities looking to shut down music file- swapping, but interest among enterprise customers is gaining. "Enterprise customers are finding out just how much music file-swapping is dragging down their networks, and they are stopping it to protect mission-critical application traffic," he said.

With all of the technological advances and some promising ROI scenarios, the Layer 4-7 device space should be one of the hottest sectors in networking. But while many vendors and solution providers report that sales are growing, the numbers don't reflect that, said Joshua Johnson, an analyst with Synergy Research.

Johnson said that sales of Layer 4-7 devices fell more than 25 percent in 2002 and the declines continued in the first half of 2003, albeit at a slower pace. "Everybody thinks this should turn around, but I haven't seen any evidence of it. I am predicting single-digit growth, but that's dependent upon strong business growth," he said.

Still, even as the category continues to decline, players within the space are making gains at the expense of the giants. Smaller vendors that focus on the Layer 4-7 space, such as Packeteer, F5 Networks, NetScaler and Radware, this year have taken market share from networking powerhouses Cisco Systems, Nortel, Extreme and Foundry, Johnson said.

Those gains could be a reflection of who is buying right now, Johnson said. As the largest enterprise clients open their purse strings, the business is likely to swing back to the more established networking players.