The market's leader, Akamai Technologies, is reeling after layoffs and declining revenue estimates. Smaller rivals, such as iBeam and Edgix, are looking for buyers or have been forced to restructure their businesses.
Just a year ago--when Akamai's stock was still trading around US$100--the business was seen as a critical component of the Net, where myriad companies might make money by eliminating network bottlenecks that slowed Web site downloads. But the business was an expensive one to get into, and like Net infrastructure providers across the industry, the companies that swarmed into Akamai's territory are now struggling.
Analysts say the business is still critical, but the market isn't big enough for all the companies that emerged. Even the leaders will have to do some serious rethinking in the upcoming months, they say.
"Frankly, a lot of (these companies) were Akamai wannabes capitalised by greedy people wanting a bit of the Akamai action," said Jupiter Research analyst Peter Christy, who follows the industry closely. "Now their life expectancy is measured in how long it takes them to burn through their cash."
Slowing down the speeders
The content delivery business is built on the idea that Web companies would pay a premium to keep their visitors from having to wait while pages loaded slowly on the computer. Akamai was the first major company to break into the public eye, making headlines by grabbing Net powerhouse Yahoo as one of its first customers and creating a sophisticated technology that was seeded at the Massachusetts Institute of Technology.
As big companies flocked to Akamai's network--and as that company's stock shot skyward--a host of competitors began entering the market. Some of the early rivals, such as Sandpiper Networks and Mirror Image Internet, were snapped up by other Web services companies looking to expand their portfolios.
Most of these companies pursued different slices of the same idea. All attempted to move much of a Web site's content to the "edge" of the Net. This meant different things to different companies, but generally involved putting a vast number of data storage machines inside local ISP networks and other points that were as physically close to Web surfers as possible.
Parts of Web sites such as unchanging graphics or text were stored in these "caches." Thus, when someone tried to download a Yahoo page, for example, many of the biggest, slowest elements of the page no longer had to go through bottlenecks and traffic jams elsewhere on the Net, speeding the overall download of the page.
