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Layer 3 switches do routing with ASIC chips. Routers do it with a microprocesor and its associated software. Therefore the Layer 3 switches are much faster than traditional routers, but cost more. We need them both because in many situations a slow router is sufficient and cheaper than a gigabit layer 3 switch router.
Posted by rodriguezrayen
http://searchnetworking.techtarget.com/expert/KnowledgebaseAnswer/0,289625,sid7_gci1026363,00.html
Posted by justfawad