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New Routers Catch the Eyes of IT Departments

Multifunctional Boxes Keep Business Networks Humming, Curbs Sprawl

Information-technology professionals like Jeff Young want to cut down on the sprawl of networking equipment in their company's computer rooms. In the process, they are being drawn to a new type of product coming out of the technology-networking industry.

Mr. Young, chief technology officer at financial data company FactSet Inc., used to buy a different piece of networking equipment to handle each different technology task. That meant he purchased one piece of gear to deal with email spam, another piece for Internet-traffic filtering, and yet other equipment for firewalls. Overall, his Norwalk, Conn., company had more than 300 "routers," the back-office networking gear that helps to direct and shape Internet traffic.

Having so many routers was expensive and took up space. So late last year, Mr. Young began testing a new type of router from networking company Cisco Systems Inc. Called the ASR 1000, the router crams multiple functions -- including speeding data through computer networks and filtering out unwanted Internet traffic -- into one box. Cisco officially launched the product this month.

"The consolidation component of this gear is compelling," says Mr. Young. He adds that for every five of FactSet's old routers, he plans to replace them with one of Cisco's new routers. Mr. Young expects the rollout to be finished in a year, but declines to comment on how much the deployment will cost.

As IT pros like Mr. Young clamor to deal with "box sprawl," networking companies from Cisco to Juniper Networks Inc. to Telefon AB L.M. Ericsson's Redback Networks are introducing new routers that can stuff more services into their boxes. Apart from its new ASR router, Cisco unveiled a multifunction router known as the ISR in 2004. In 2005, Redback Networks introduced a multifunction router called the SmartEdge, which can facilitate Internet telephone calls and filter Internet traffic. That same year, Juniper launched new routers dubbed the M-series, which boast Internet-telephone features and can block unwanted Internet traffic.

These new multifunction routers are intended to appeal to IT departments that want to minimize the space devoted to networking equipment, replacing older gear with more efficient products that consume less energy. Unlike typical routers, which may perform just one function, the new gear can be customized to carry out a variety of tasks, such as securing a network and ensuring important files have the proper bandwidth to reach their destinations. Prices of the new routers vary according to the different mix of services that companies add to them.

For companies that adopt these multifunction routers, there are cost savings to be had. Most of the savings will come in a company's data center, the huge back-office computer warehouses where Internet and communications companies and businesses link to each other's computer networks. Companies typically lease space in data-center facilities based on the amount of square feet that their equipment occupies. A spokesman for Cisco, San Jose, Calif., says its ASR router uses between two to four feet less in a datacenter than a bundle of networking gear delivering the same features, saving customers $4,000 to $20,000 in data-center-setup fees.

Some data centers also lease space based on the amount of power that computer equipment consumes. A Redback spokesman says its SmartEdge router consumes 61% less energy than a competitor's single-function box that is used to deliver Internet-telephone and data services. That translates into savings of about $3,000 a year in energy bills, says the spokesman.

Companies need to weigh such potential cost savings against the front-end expense of these new routers, however. Because the multifunction gear packs in more services than typical routers, they can be four times as expensive at the outset as typical routers that cost about $20,000 apiece. Cisco has said its new ASR router costs between $35,000 and $400,000, depending on what functions a customer decides to add to the box.

Still, "while clearly the equipment is more expensive, in some cases the cost savings and reduction in energy can offset the pricing," says Ray Mota, an analyst with Synergy Research Group Inc., a Reno, Nev., market research firm.

Some corporate customers may not like the multifunction routers for other reasons. Mr. Mota says some IT managers feel safer having a dedicated router performing a single task, thereby ensuring service for that one task is optimal.

Manoj Leelanivas, a senior vice president at Juniper who oversees the unit that mainly produces routers for cable and telephone companies, adds that some corporate customers may avoid the new routers because of the way their companies' IT is structured. He notes, for instance, that some corporate IT departments have separate groups managing communications, networking and security and don't want to introduce equipment that would overlap.

This isn't the first time networking companies have offered multifunction routers. Early this decade, networking concerns such as Crescent Networks Inc. and CoSine Communications Inc. introduced routers that could perform several tasks, but those boxes were often faulty. Equipment manufacturers have since developed specialized processors and software to improve the performance of such routers. Redback Networks, for instance, has spent about $250 million since 2005 on developing special processors. Cisco says it spent $100 million and obtained 42 patents for the semiconductor it is now using in its new ASR router.

Mark D. Krupinski, who oversees networking for WesBanco Bank Inc., turned to multifunction routers to control the box sprawl at his Wheeling, W.Va., bank. In 2006, after several acquisitions, WesBanco had 80 different phone systems spread across 82 bank locations. The extensive network included dozens of specialized call-routing boxes and other equipment.

So Mr. Krupinski decided to consolidate all the confusing systems into a single network. By early last year, the massive array of routers serving the different phone systems had been replaced with a single server and an ISR multi-function router from Cisco. Mr. Krupinski declines to say what the bank spent on the conversion, but says the move saves it $1 million a year in maintenance and telecommunication costs.

"It's a headache to have to worry about maintenance and power consumption for loads of equipment if you don't have to," he says. "The costs savings we saw more than justified our consolidating."

By Bobby White
Wall Street Journal; March 25, 2008