Sun moves into the server farm business

Internet-related deals are getting bigger as the global online economy shifts into higher and gears. This week, Sun Microsystems said it is partnering with Inktomi and Digital Island to install 5,000 high-speed Internet servers at Internet Service Providers in 350 metropolitan areas around the world. The server will let ISPs offer new high-speed online business services to the growing number of companies.

The servers will be equipped with Inktomi traffic and content delivery software that is designed to speed up the delivery of Internet data. Inktomi and Sun both made undisclosed equity investments in Digital Island as part of the deal. "The goal is to push information and content to the edge of the network where it becomes faster to retrieve and send," said Sun president Ed Zander.

"Sun has long pushed the concept of distributed computing under our mantra, ‘The Network is the Computer.’ The world is coming around to our view," Zander said. The Sun-Inktomi-Digital island deal is the latest in a series of moves by key players, including Intel and AT&T to seed the global market with high-speed server farms and other such installations to service the e-commerce requirements of numerous corporate entities.

The trend of companies using server farms to handle their online traffic is based in large part on the desire to get around the Internet’s annoying data traffic bottlenecks that can slow access to information and online services. By moving e-commerce processing functions to servers sitting right "at the edge of the Internet," some of the pitfalls can be effectively avoided or minimized. That in turn enhances the online experience of the customer and thereby increases online sales.

The Sun deal is the largest program to date to install powerful telecommunications carrier-class servers to connect businesses to the existing high-speed telecommunications network. "We are not focusing on, or divulging, the amount of the equity investments. We are talking about the marketing relationship, said Ruann Ernst, Digital Island's chief executive. Inktomi specializes in so-called data caching technology, which it supplies to 45 percent of search services and to e-commerce shopping companies. Digital Island, which went public in June, operates large data centers that act as private networks for e-commerce companies. The Sun alliance appears inspired by the success of Akamai, a content-delivery service that opened its doors for business only one year ago, went public this summer, and now has a market value of $20 billion! Akamai operates a vast network of computers around the world to handle Internet traffic for private customers. Akamai shares jumped $7.75 to $233.75 as investors took the competing Sun venture as an affirmation of Akamai's business model.