Stephen,
I've always stated that "switch" is a marketing term meaning "fast". Thus a "L2 switch" is a "fast bridge" and a "L3 switch" is a "fast router". In this light, the Yankee Group is just now catching on to something we all knew a decade ago -- slow (i.e. software) routers are dead.
As you are probably more aware than I, software-based-forwarding routers will die when people stop running the so-called "desktop protocols", and even then, most next-gen routers will continue to need functions that can only be provided economically and perhaps thermodynamically (in terms of heat dissipation) in the form of sw "services" running on purpose-built and/or general-purpose CPUs. Examples are VOIP call processors, some FW ALGs as new protocols emerge, etc. The concept of L2 switching based on L3 information tends to be viable only when one can transparently bridge between the L2 protocols - otherwise, you are making L3-only decisions, and doing all sorts of L2 rewrite which many traditional Ethernet switches can't necessarily do. Things are getting better, but "L3-switches" pale in comparison to today's high-end routers on almost all fronts. If you take GigE out of the equation, modern "L3 Switches" are just as expensive as modern "core routers" - and routable, "mpls-able" L3 GE ports are _more_ expensive on "switches" than "routers" (see 4xGE OSM vs 4xGE GSR 'tetra' pricing). Media diversity, queuing performance, and FIB density is what really differentiates the two at this point, IMO. I am unaware of a traditional switch-turned-router (and I use these terms here as most do who draw a distinction) that can exceed the forwarding capacity of a core router when the media is largely WAN-based, there are complicated classification and filtering rules that are very dense, when complex queuing policy needs to be applied, and when the routing table is huge. Or perhaps my earlier experience with these switches-trying-to-be-routers has left me a bit jaded....
There's a more interesting level to the discussion if you look at what carriers are interested in for their backbone hardware today; while I'm obviously biased based on my employer, I've seen a lot more emphasis on $20k-per-10GE-port "L3 switches" than $200k-per-10GE-port "core routers" in the current economic climate.
Of course, a "routable" 10GE port does NOT cost $20k - sure you can do MLS or whatver it is called - but things like label imposition/disposition is not possible. Also, last I saw, my MLS-enabled MSFCs weren't able to gather "vlan interface" statistics - they were all embedded in some L2 asic that I had to glean from the "switch." Further, Ethernet has the worst OAM capabilities of any modern media. BFD will help detect failures when it is available, but will never be able to tell me "why". SONET is clearly superior in the aspect. So, for enterprise switching, "L3 switches" are mostly fine - barring any funky bridging requirements (Blue protocols). But for carrier backbones, I suspect we will continue to see the majority of implementations usng modern "core routers". And we haven't even begun talking ATM and FR, and what device better suits these applications. Judging from your company's position on this front, I suspect that "core routers" may be our best bet here, given that many who could do switching well were unable to "bolt on" a usable, stable routing implementation. But that is another religious discussion for another day! My .02 chris
S
Stephen Sprunk "God does not play dice." --Albert Einstein CCIE #3723 "God is an inveterate gambler, and He throws the K5SSS dice at every possible opportunity." --Stephen Hawking