Peribit Networks is branching out from compression into traffic shaping at the same time that is introducing a new appliance designed to save money and improve performance of branch-office WAN connections.The company, which makes the Sequence Reducer (SR) family of compression gear, is upgrading its software to include bandwidth allocation for specific classes of traffic, ensuring that top priority traffic gets the bandwidth it needs on crowded links.The new software, called SR System 3.0, can create up to 16 classes of traffic to which customers can assign up to 40 different applications at any one time. In all, the Peribit boxes can recognize 256 different applications.This addition of bandwidth mangement to Peribit's gear follows the announcement last month of similar capabilities from competitor Expand Networks, bringing both companies into competition with traffic shaping specialists like Packeteer.Peribit promises to reduce traffic on these links by at least 50%. The company claims its average reduction is actually between 70% and 80%, and that the best actual case with a customer its gear reduced traffic 92%.The SR devices sit at both ends of WAN links on the LAN side of WAN routers and scan for repetitive patterns in the traffic. It then substitutes shorter patterns to replace those it recognizes, thereby sending fewer bits across the WAN.The SR devices can build 1.5G byte dictionaries of patterns and their replacements over time. As traffic changes and old patterns become less frequent, entries for those patterns are dropped from the dictionaries and replaced with others that occur more frequently.Beyond traffic shaping, Peribit is also introducing a new device called the SR-20. Until now, the SR devices have been built for links between T-1 and T-3, but the SR-20 is for lines as small as 128K bit\/sec and up to 2M bit\/sec. The company says it was built for customers with relatively low-speed but expensive international lines and for those places where it is difficult to upgrade to larger circuits.This happened to Palo Alto law firm Fenwick & West when it opened a San Francisco office. It planned for a high-speed fiber link between the two sites, but the fiber deal was delayed. All the firm could get was a T-1 between the offices, says Matt Kesner, CTO for the firm.Adding an SR device at each site reduced traffic by 70%, increasing performance enough that end users who had not been told of the change remarked on the faster link, Kesner says. Since then the firm has gotten its 10M bit\/sec fiber link, but continues to use the SR, which is a larger model than the new SR-20. Kesner says the compression gives the link LAN-like performance.In another instance, the firm replaced a 1.5M\u00a0 bit\/sec T-1 VPN connection to its Washington, D.C. office with a 256K bit\/sec frame relay circuit with no loss of performance thanks to Peribit boxes, he says. The 256K bit\/sec frame connection costs an eighth of what a direct T-1 or a 1.5M\u00a0 bit\/sec frame link would have cost, Kesner says.Peribit claims customers have had paybacks on the devices in a matter of a days to a year.Despite the chances to save money, not many businesses use compression devices, says Zeus Kerravala, an analyst with The Yankee Group, estimating the market at $20 million to $30 million. "The biggest struggle is to get people to believe they actually need this. It's also another box in the network, and that's not always desirable," Kerravala says.Some users turn on compression in their Cisco routers, but that adds latency, he says.Peribit is also adding a software platform to centrally manage its gear. Called Centralized Management System (CMS), the software lets customers see the performance of individual applications and the reduction\u00a0 in size of each application. CMS runs on Windows server platforms and can configure and manage up to 500 SR devices.SR-20 costs between $2,900 and $20,000, depending on the speed of the WAN connection it presides over. CMS starts at $5,000 and increases depending on how many devices it can manage.