Inktomi Loses Its Cache

The company that started the whole Web-caching business is exiting the arena. Inktomi, Foster City, Calif., announced in July that it will significantly reduce its content-networking product group and lay off several hundred people. It is certainly a sign of the times when a major technology company sheds itself of a technology it arguably pioneered, with a reduction of almost half of its staff. Of course, losing more than $600 million during the past two years doesn't make things any easier.

"Our content-networking business has been highly dependent on the telecommunications and service-provider markets," says David Peterschmidt, president and CEO of Inktomi. Clearly, the economy and lack of demand from these markets contributed to this decision.

The company will put more emphasis behind its search-software solutions, which are also market-leading products and have been gaining traction as of late, even as more Internet companies go belly-up. The company says it will continue to support its existing customers and channel partners in the caching area.

Inktomi was one of the early entrants into the Internet-technology game, beginning with its search tools in 1996 and launching its caching product a year later.

Caching is one of those technologies that keep the Web running,and running well,yet is a hard sell for anyone to really embrace because it operates completely under the covers. Part of the problem for Inktomi and others is the question of who ends up paying for caching. Inktomi was banking on the ultimate end user as the customer, while Akamai and Cisco looked toward revenues from the content supplier, such as CNN or Yahoo, or for enterprises that were upgrading their networking infrastructures to include multiple Web technologies besides caching, such as proxy servers, load-balancing, security and redundant devices. It appears caching alone as a product strategy is no longer viable.

But, perhaps, the cachet of caching can survive this latest blow,there are some indications that security-and Web-content management companies are beginning to include caching as part of a total package of services in their new offerings.