Software vendor NextHop Technologies Inc. is moving into Layer 2, bringing some head-to-head competition into the embedded software space.

NextHop has made its name at Layer 3, selling IP routing code for equipment vendors to include in their systems. Yesterday, the company released its first Layer 2 control plane, GateD NGS 2.0, which will bring the company more deeply into the enterprise space, in addition to helping some of its telecom customers (see NextHop Intros Layer 2 Software).

This puts NextHop more directly in competition with Future Software Ltd. (FutureSoft), IP Infusion Inc., and LVL7 Systems Inc., which provide software for Layer 2 equipment. In turn, those companies are moving up the stack into Layer 3, creating a free-for-all where everybody is starting to overlap everybody else.

The plunge into Layer 2 adds some complexity to NextHop's business. The company is now caretaker to four sets of software code, the others being a Multiprotocol Label Switching (MPLS) offering, some wireless software from defunct startup Legra Systems Inc., and the original GateD routing software on which NextHop was founded in 2000. (See NextHop Expands Routing Software, NextHop Leaps on Legra, and NextHop: Fast-Food Routing? )

That leads competitors to question just how NextHop plans to wield these different software units. "We all have headaches, but they have four completely different code bases," says Steve Mock, vice president of marketing and business development for IP Infusion.

But even though the MPLS code and Legra software came from acquisitions -- and even though a small percentage of the Layer 2 code was likewise purchased -- NextHop says the software chunks are part of one happy family. "Our MPLS code is tightly integrated with our routing code," says Dennis Tsu, NextHop vice president of marketing. "When we added Layer 2, we did it with that same philosophy. The whole infrastructure is shared."

It was NextHop's Layer 3 customers who asked to have Layer 2 code integrated into the software, Tsu claims. (Integration of the Legra code is still in process, he adds.)

Prepackaged software is increasingly crucial to enterprise networking and even in some telecom circles. Many systems houses no longer have the manpower -- nor the desire -- to build products entirely from scratch. That's partly due to the massive layoffs of the past few years, but simultaneously, the market for prefab components has matured. Network processors and pre-packaged routing code are good enough for some OEMs to use them as a head start on systems design.

The change is reflected in chip companies' efforts to build turnkey systems, which come complete with software, sometimes leaving enough room for an OEM to add some proprietary code. Companies such as Marvell Technology Group Ltd. (Nasdaq: MRVL) and Sandburst Corp. have pursued this model, and others such as Broadcom Corp. (Nasdaq: BRCM) come close by offering software with their enterprise networking chips (see Marvell's Ethernet Switch Kit and Sandburst Targets Taiwan).

By descending into Layer 2, NextHop will have to join IP Infusion and LVL7 in helping prepare these kinds of ready-made products. Competitors say it's going to be a difficult adjustment. "It's a different kind of model, with organizations being able to lean on somebody to do almost all the work for them," says Dave King, vice president of marketing for LVL7.

NextHop officials claim they're ready for the change.

"We're already well in the process of doing the integration of our software with Broadcom's hardware and their software development kit," Tsu says. "We're also working with other Layer 2 companies such as Marvell and SwitchCore to do that."

One of NextHop's competitors in the Layer 3 software market, Data Connection Ltd. (DCL), doubts whether there's money to be made from Layer 2 products. "Our experience is that our customers already have ready access to Layer 2 technologies. It doesn't make sense for us to extend our product offerings in this area," says Phil McConnell, Data Connection's CEO.

— Craig Matsumoto, Senior Editor, Light Reading

For more on this topic, check out:

• The coming Light Reading Webinar:
  — Control Plane Processors: The Brains at the Center

For further education, visit the archives of related Light Reading Webinars:

• Scaleability & Reliability of Routing Protocols and OS in Public Networks
• Network Processors: From Niche to Mainstream