Streaming Media Getting Closer
By Matt Paolucci

Digital Island Inc. (ISLD), which provides hosting, content delivery, network management, and application services for e- business, announced it is working with Compaq Computer (CPQ), Intel (INTC) and Microsoft (MSFT) to extend its infrastructure to provide broadcast-scale streaming media for the first time over the Internet.

The streaming network is expected to accelerate the market opportunity for entertainment providers and other companies, such as financial services and publishing firms, to make use of rich media for Web-based customer transactions.

"This relationship is creating a win-win solution in deploying a streaming network capable of delivering 7.5 million simultaneous streams. Digital Island is poised to take advantage of the rapidly growing streaming market," said Greg Howard, principal analyst of the High-Tech Resource Consulting Group, LLC.

According to Jupiter Communications, the global market for streaming media content delivery will grow from a projected $78 million this year to $2.5 billion by 2004.

When you talk about a network capable of sending 7.5 million simultaneous streams of various media, that's pretty much on par with prime-time TV's reach, not to mention that this network will be larger than any previously announced streaming network.

As part of the deal, ISLD will receive a combined equity investment from Compaq, Intel and Microsoft of $45 million to support its infrastructure development, expected to take approximately two years. In addition, Compaq Financial Services (CFS) will provide $50 million in equipment lease financing to Digital Island.

CFS said it would also provide $50 million in equipment-lease financing to Digital Island, to expedite their worldwide deployment of Compaq servers. The expansion includes penetration into some 25 countries in North America, Europe and Asia.

Digital Island has committed to deploy up to 8,000 Intel architecture-based Compaq servers worldwide, including the new ultra-dense ProLiant DL360 servers built on Intel's Pentium III processor, which will run on Microsoft's Windows 2000 operating system. The servers will provide the means for regional data- center hosting with network-edge computing able to locate streaming content close to the end user for the best possible streaming quality.

"The Internet is all about interactivity and e-Business is about the end-user experience," said Ruann F. Ernst, Chairman and CEO of Digital Island. "…This powerhouse combination of Compaq, Intel and Microsoft working with Digital Island will remove the barriers to using rich media to reach broadcast-scale audiences with full transactional capabilities, adding an entirely new dimension to e-Business around the world."

Wall Street apparently liked the move as well, bidding up shares of ISLD more than $11 to $46.50 in afternoon trading.