In the musical Les Miserables, the prisoners learn to look downward to avoid making eye contact with their brutal captors. In today's brutal market, networking-chip vendors have also learned to look downward to survive.

During the boom, too many companies launched programs to develop network processors, traffic managers, security processors and switch fabrics for 10- and even 40-Gbit/second line cards. With little or no market for such devices today, these vendors are now scrambling to retarget their chips for lower line speeds.

Just last year, IBM, for example, was touting the terabit scalability of its switch-fabric architecture. At NPC East 2003, the company instead introduced a fabric for systems with a total bandwidth of 20 Gbits/s, a speed that used to represent a single line card. IBM's PowerPRS C192 is aimed at systems with up to eight OC-48 ports.

Cavium Networks' original goal was to deliver the world's fastest encryption chip. Since doing just that in 2002, the startup has been steadily reducing the price and performance of its security processors, allowing it to enter new markets. Cavium's latest announcement includes the Nitrox CN501w, which sells for less than $15 and can be used in wireless-LAN access points.

Xelerated, too, accomplished its aggressive goal of delivering the world's fastest chip-in this case, a 4xOC-192 network processor. However, it quickly released a 4x10-Gbit Ethernet version that targets the enterprise instead of the moribund core-router market. At $490, the Ethernet chip has less than half the margin of the Sonet chip, but it has a much bigger potential market. Xelerated's change of direction was rewarded last month with a $12.5 million infusion of venture capital.

Azanda recently entered production with its first two traffic-manager chips, one for OC-48 applications and a low-end device for OC-12. These products are a far cry from the company's original plan to develop an OC-192 (10-Gbit/s) traffic manager. The startup revised its product plan because of a lack of market interest in high-speed ATM.

Going for the brass ring, Internet Machines developed a network processor, traffic manager and switch fabric for core routers with 10-Gbit/s line cards. The well-funded startup has struggled to find customers for its powerful chip set, however, and will need to follow the footsteps of other high-end vendors to find success. These tracks lead in one direction: down.

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