Both companies sell caching technology that speeds Internet access by stashing information closer to the users who need it. CacheFlow sells servers that accomplish this; Akamai sells caching services to customers who don't want to set up servers themselves.
Under a deal announced today, Akamai will tie together the companies' caching technologies, and the firms will jointly develop products. In addition, CacheFlow will sell Akamai's FreeFlow caching service, the companies said.
The deal highlights the increasing number of alliances being struck as companies strive to avoid sluggish or even embarrassingly inaccessible Web sites due to heavy traffic. Companies across the high-tech landscape--including computer makers, network equipment makers, Web site hosting firms and telecommunications firms--are forming partnerships to make sure information is delivered quickly.
The deal won't likely be welcome news at VA Linux Systems, which builds Linux computers that Akamai buys, even though CacheFlow and VA servers aren't used for the same purpose in a network. Akamai is VA's biggest customer, according to VA's Securities and Exchange Commission filing. Though VA's customer base is broadening, Akamai accounted for 12 percent of VA's revenue in the last six months, the only company that exceeded 10 percent, VA said.
Though use of the CacheFlow servers will boost the benefits of using Akamai's network, the CacheFlow-Akamai deal won't affect Akamai's relationship with VA, spokesman Chris Turner said. Without servers from CacheFlow or a similar company, a company must prepare Web site content in advance to use Akamai's network, he said.
Though Akamai is a strong partner, CacheFlow can't afford to relax. Its special-purpose "server appliances" also face competition from computer giants such as Dell, Compaq and IBM, as well as smaller companies such as Cobalt Networks and Network Appliance. That competition led Merrill Lynch analyst Steve Milunovich to predict Cobalt will have to increase marketing efforts and thereby delay profitability three months.
Under the deal, CacheFlow will incorporate software from Akamai to automate the process of distributing information to caching servers, the companies said. Though the agreement doesn't involve any purchases of CacheFlow servers, the ideal location for them in an Akamai-augmented network would be between the Akamai servers and the originating Web site.
Marc Andreessen, a founder of the famed Netscape Communications, is a CacheFlow board member and investor. He said he backed the company because he believes there is a transition taking place, from the older model where high-speed "routers" transferrer Internet traffic as fast as possible, to the newer caching technology. The transition is "from moving bits to intelligently managing where they are," he said in an interview.
Akamai has more than 2,000 servers in 40 countries to speed data transfer, the company said.
Hewlett-Packard has invested in Xcelera, Mirror Image's parent company. Inktomi has partnerships with Sun Microsystems and Intel to build server appliances with its caching software. And Sun and Inktomi have invested in Digital Island.
Linux, a low-cost sibling to the Unix operating system, is popular in some caching servers--it's used in those from Cobalt, for example. But Linux faces competition from a new version of "embedded" Windows 2000 for special-purpose servers that will be used by Dell and IBM.