Three-way strategic alliance on deck: Sun Microsystems, Inktomi, Digital Island pact...|
By Bambi Francisco, CBS MarketWatch
Last Update: 10:06 PM ET Dec 7, 1999
Internet Daily Net headlines
SAN FRANCISCO, Calif. (CBS.MW) -- In a bid to compete in the sizzling content distribution space,Digital Island, Inktomi and Sun Microsystems on Wednesday will announce a strategic alliance. Shares of Digital Island (ISLD: news,msgs) ran up 8 3/8 to 78 in after-hours trading and Inktomi(INKT: news,msgs) shot up 1 13/16 to 165 1/2. Sun Microsystems (SUNW: news, msgs)fell 1/16 to 144 after the close.
While the companies would not comment, sources close to the deal told CBS MarketWatch that Digital Island will buy several thousand of Sun Microsystems' servers.
Digital will deploy its software as well as Inktomi's Traffic server platform and content distribution suite onto the Sun servers.
The deal gives Digital Island the largest network by far, as measured by the number of servers. These servers can be deployed in a matter of a few days to 90 days.
In comparison, Akamai (AKAM:news, msgs), considered the dominant and first-mover in this emerging business, at least in terms of market valuation, has network server deployments in the order of 1,500. Additionally, Digital Island's servers will contain multiple processors, making them more
powerful than a single-processor server. It's unclear whether Akamai has single processors or multiple processors on its servers.
Deeper relationships Inktomi's relationship with Digital Island isn't new.Back in September, Inktomi and Digital Island formed a partnership to create a global content distribution service. In the same month, Inktomi purchased
privately-held WebSpective Software to compliment its keystone product Traffic Server. Sun Microsystems is also one of the first adopters of Inktomi's cache technology.
Combine Inktomi's suite of network products and Sun's servers and Digital Island becomes a powerful player in the nascent and promising business of delivering content at TV-like speed. Content delivery providers enable content companies to speed up the time it takes to download or view Web pages, critical in a world of rich media.
As the Internet competes with television for content and information distribution, content providers need to provide bandwidth streaming content at or near TV quality to sustain their viewership. That's why Akamai has not only "akamaized" many content providers, such as CNN interactive, Discovery Channel Online, and Yahoo (YHOO: news, msgs), the company also appears to "akamaize" investors as well. The company now commands a market cap north of $20 billion.
Meanwhile, Digital Island sports a $2.5 billion valuation. After Wednesday's announcement, this disparity in market valuation could help Digital Island gain some Web respect. Inktomi, with a small stake in Digital Island, should benefit as well.