One of the problems with proxies is that they must evaluate a lot of information in a lot of packets. In addition, you need to install a separate proxy for each application you want to support. This affects performance and increases costs. A new class of firewall product is emerging that uses stateful inspection techniques. Instead of examining the contents of each packet, the bit patterns of the packets are compared to packets that are already known to be trusted. For example, if you access some outside service, the server remembers things about your original request like port number, and source and destination address. This "remembering" is called saving the state. When the outside system responds to your request, the firewall server compares the received packets with the saved state to determine if they are allowed in. While stateful inspection provides speed and transparency, one of its biggest disadvantages is that inside packets make their way to the outside network, thus exposing internal IP addresses to potential hackers. Some firewall vendors are using stateful inspection and proxies together for added security. The debate over whether proxies or stateful inspection techniques are better rages on. If you are choosing a firewall, talk to vendors and read the product reviews. In the meantime, some router vendors such as Bay Networks and Ascend are starting to implement firewalls in their router products, closing the gap between inexpensive hardware-based devices and high-end application-level servers.
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