This excerpt is from a recent interview with Art Reisman and has some good insight into the future of bandwidth control appliances.
Are you seeing a drop off in layer 7 bandwidth shapers in the marketplace?
In the early stages of the Internet, up until the early 2000s, the application signatures were not that complex and they were fairly easy to classify. Plus the cost of bandwidth was in some cases 10 times more expensive than 2010 prices. These two factors made the layer 7 solution a cost-effective idea. But over time, as bandwidth costs dropped, speeds got faster and the hardware and processing power in the layer 7 shapers actually rose. So, now in 2010 with much cheaper bandwidth, the layer 7 shaper market is less effective and more expensive. IT people still like the idea, but slowly over time price and performance is winning out. I don’t think the idea of a layer 7 shaper will ever go away because there are always new IT people coming into the market and they go through the same learning curve. There are also many WAN type installations that combine layer 7 with compression for an effective boost in throughput. But, even the business ROI for those installations is losing some luster as bandwidth costs drop.
So, how is the NetEqualizer doing in this tight market where bandwidth costs are dropping? Are customers just opting to toss their NetEqualizer in favor of adding more bandwidth?
There are some that do not need shaping at all, but then there are many customers that are moving from $50,000 solutions to our $10,000 solution as they add more bandwidth. At the lower price points, bandwidth shapers still make sense with respect to ROI. Even with lower bandwidth costs users will almost always clog the network with new more aggressive applications. You still need a way to gracefully stop them from consuming everything, and the NetEqualizer at our price point is a much more attractive solution.
Related article on Packeteers recent Decline in Revenue
Related article Layer 7 becoming obsolete from SSL
What Does it Cost You Per Mbs for Bandwidth Shaping?February 14, 2012 — netequalizer
Sometimes by using a cost metric you can distill a relatively complicated thing down to a simple number for comparison. For example, we can compare housing costs by Dollars Per Square Foot or the fuel efficiency of cars by using the Miles Per Gallon (MPG) metric. There are a number of factors that go into buying a house, or a car, and a compelling cost metric like those above may be one factor. Nevertheless, if you decide to buy something that is more expensive to operate than a less expensive alternative, you are probably aware of the cost differences and justify those with some good reasons.
Clearly this makes sense for bandwidth shaping now more than ever, because the cost of bandwidth continues to decline and as the cost of bandwidth declines, the cost of shaping the bandwidth should decline as well. After all, it wouldn’t be logical to spend a lot of money to manage a resource that’s declining in value.
With that in mind, I thought it might be interesting to looking at bandwidth shaping on a cost per Mbs basis. Alternatively, I could look at bandwidth shaping on a cost per user basis, but that metric fails to capture the declining cost of a Mbs of bandwidth. So, cost per Mbs it is.
As we’ve pointed out before in previous articles, there are two kinds of costs that are typically associated with bandwidth shapers:
1) Upfront costs (these are for the equipment and setup)
2) Ongoing costs (these are for annual renewals, upgrades, license updates, labor for maintenance, etc…)
Upfront, or equipment costs, are usually pretty easy to get. You just call the vendor and ask for the price of their product (maybe not so easy in some cases). In the case of the NetEqualizer, you don’t even have to do that – we publish our prices here.
With the NetEqualizer, setup time is normally less than an hour and is thus negligible, so we’ll just divide the unit price by the throughput level, and here’s the result:
I think this is what you would expect to see.
For ongoing costs you would need to add all the mandatory per year costs and divide by throughput, and the metric would be an ongoing “yearly” per Mbs cost.
Again, if we take the NetEqualizer as an example, the ongoing costs are almost zero. This is because it’s a turn-key appliance and it requires no time from the customer for bandwidth analysis, nor does it require any policy setup/maintenance to effectively run (it doesn’t use policies). In fact, it’s a true zero maintenance product and that yields zero labor costs. Besides no labor, there’s no updates or licenses required (an optional service contract is available if you want ongoing access to technical support, or software upgrades).
Frankly, it’s not worth the effort of graphing this one. The ongoing cost of a NetEqualizer Support Agreement ranges from $29 (dollars) – $.20 (cents) per Mbs per year. Yet, this isn’t the case for many other products and this number should be evaluated carefully. In fact, in some cases the ongoing costs of some products exceed the upfront cost of a new NetEqualizer!
Again, it may not be the case that the lowest cost per Mbs of bandwidth shaping is the best solution for you – but, if it’s not, you should have some good reasons.
If you shape bandwidth now, what is your cost per Mbs of bandwidth shaping? We’d be interested to know.
If your ongoing costs are higher than the upfront costs of a new NetEqualizer and you’re open to a discussion, you should drop us a note at firstname.lastname@example.org.