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Low latency allows human-unnoticeable delays between an input being processed and the corresponding output providing real time characteristics. This can be especially important for internet connections utilizing services such as online gaming and VOIP; VOIP is not as important as a minor delay between input from each side of the conversation is generally blamed on non-technical issues.
However, online gaming demands low latency so as not to disadvantage players with low latencies due to highly varied ping times among fellow players - for this reason, game server applications generally favor players with lower latencies by determining the data relating to a player as known to the server, and allowing players to act on that, not the data as known by the fellow player's client.
Low latency is currently a hot topic in the capital markets, particularly where trading based on algorithms (Algorithmic Trading) is used to process market updates and turn around orders within milliseconds. Low latency trading refers to the network connections used by financial institutions to connect to stock exchanges and Electronic communication networks (ECNs) to execute financial transactions. With the spread of computerized trading, electronic trading now makes up 60% to 70% of the daily volume on the NYSE and algorithmic trading close to half of that. Trading using computers has developed to the point where millisecond improvements in network speeds offer a competitive advantage for financial institutions.
See also
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