Software vendor IP Infusion Inc. is expanding its Layer 2 repertoire, reflecting the growing demand for outsourced code among vendors of Ethernet switches.

Four-year-old IP Infusion originally concentrated on IP routing stacks and other Layer 3 software, competing with the likes of Data Connection Ltd. (DCL) and NextHop Technologies Inc. But the company has increasingly sought out Layer 2 work, which supports more basic connectivity. Indeed, Layer 2 is the focus of version 5.5 of the ZebOS Advanced Routing Suite, announced today.

The new code adds support for numerous IEEE 802.1 LAN standards, such as the Spanning Tree and Rapid Spanning Tree protocols or virtual LAN bridging.

Even though Layer 2 software is easier to do, most R&D money spent on outsourced code has historically gone towards Layer 3. Now that's changing, as demand for routing code drops and OEMs clamor for Ethernet switching programs.

"In the high end [Layer 3], you probably have more players with more expensive software," says John Metz, president of consulting firm Metz International. "What are they going to do to make more money? One answer is to go to Layer 2."

It's a less sophisticated market but includes higher volumes, particularly when it comes to low-cost Ethernet switches. OEMs such as D-Link Systems Inc. and Linksys don't want to do the hardware or software design themselves, thus opening the door to software vendors.

Evidence of the Layer 2 market's attraction is evident in the acquisition of Radlan Computer Communications Ltd. by Marvell Technology Group Ltd. (Nasdaq: MRVL) (see Marvell Goes Soft). Marvell is now offering turnkey Ethernet switches fully loaded with software gleaned from Radlan (see Marvell's Ethernet Switch Kit).

Other vendors offer both Layer 2 and Layer 3 software but take a different approach from IP Infusion's. LVL7 Systems Inc. planned to do both from the start, which lets the company better combine Layers 2 and 3 (and even Layer 4) offerings where needed, says Kishore Jotwani, vice president of marketing. Future Software Ltd. (FutureSoft) also offers Layer 2 and Layer 3 software but provides programming services as well, something IP Infusion isn't interested in."We prefer to work towards a 'mass market,' if you will," says Scott Seal, IP Infusion product manager. One reason is that software has higher margins than services due to the low overhead: "There's no hardware to build, and you don't even have to put it on a disk anymore."

— Craig Matsumoto, Senior Editor, Light Reading