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Will CacheFlow Ever Generate Cash Flow? by Chris Connor Speeding up the World Wide WaitThere is nothing that a Web surfer hates more than requesting a Web page and then having to stare at a blank screen for a minute or more. Internet caching deals with this problem because it stores frequently accessed data closer to Web surfers (on the edge of the network) than an originating server does, which speeds up a Web site's response time and nearly eliminates the blank screen problem altogether. So which companies are providing Internet caching products to eliminate the world wide wait? The list of companies involved in the Internet caching business reads like a who's who of technology giants, including Network Appliance {NTAP}, Cisco {CSCO}, Inktomi {INKT}, and Novell {NOVL}. However, the current leader, CacheFlow {CFLO} is undoubtedly less well-known to investors than those aforementioned companies. CacheFlow was founded by the same guy (Michael Malcolm) who co-founded network attached storage (NAS) leader Network Appliance. Mr. Malcolm, who holds several network caching patents, has recently announced his intent to leave CacheFlow to found yet another Internet infrastructure company, but CacheFlow appears to be headed in the right direction after passing Network Appliance for the lead in the lucrative Internet caching market. Not a One-Trick PonyCacheFlow leads the Internet caching market primarily because it has a broad product line that best utilizes the infrastructure-friendliness of Internet caching. While corporations and Internet service providers place the company's Client Accelerators at the edge of networks in order to reduce response times and save bandwidth, CacheFlow's Server Accelerators are deployed near giant Web server farms to improve the performance and scalability of the servers. The Server Accelerators are particularly interesting because they can boost the amount of content that existing server infrastructure can serve by five to ten times. In addition, Server Accelerators lessen server response time by an incredible 50 to 80 percent. By maximizing existing server infrastructure, Server Accelerators keep CacheFlow's customers from having to purchase additional unneeded servers. According to Jupiter Communications, the streaming content delivery market will be valued at $6 billion (based on sales) by 2004. Looking ForwardAccording to Jupiter Communications, the streaming content delivery market will be valued at $6 billion (based on sales) by 2004 and CacheFlow aims to take a major piece of that lucrative pie. Towards that goal, CasheFlow acquired privately-held Entera for $440 million. The deal makes sense for CacheFlow from a strategic perspective because Entera gives CacheFlow a complete streaming media product offering, but it puts a question mark on the future of the company's immediate earnings at a tough time for Internet infrastructure stocks. Over the longer term, however, look for CacheFlow to be one of the dominant providers of Internet infrastructure. |
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