diff --git a/services/presence2/Makefile.am b/services/presence2/Makefile.am
index fa22b191..3ec8c68c 100644
--- a/services/presence2/Makefile.am
+++ b/services/presence2/Makefile.am
@@ -1,6 +1,8 @@
 sugardir = $(pkgdatadir)/services/presence2
 sugar_PYTHON = \
-	__init__.py
+	__init__.py \
+	buddyiconcache.py \
+	presenceservice.py
 
 bin_SCRIPTS = sugar-presence-service2
 
diff --git a/services/presence2/buddyiconcache.py b/services/presence2/buddyiconcache.py
new file mode 100644
index 00000000..7eb12eb8
--- /dev/null
+++ b/services/presence2/buddyiconcache.py
@@ -0,0 +1,77 @@
+# Copyright (C) 2007, Red Hat, Inc.
+#
+# This program is free software; you can redistribute it and/or modify
+# it under the terms of the GNU General Public License as published by
+# the Free Software Foundation; either version 2 of the License, or
+# (at your option) any later version.
+#
+# This program is distributed in the hope that it will be useful,
+# but WITHOUT ANY WARRANTY; without even the implied warranty of
+# MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+# GNU General Public License for more details.
+#
+# You should have received a copy of the GNU General Public License
+# along with this program; if not, write to the Free Software
+# Foundation, Inc., 51 Franklin St, Fifth Floor, Boston, MA  02110-1301  USA
+
+import os, time, md5
+from sugar import env
+from sugar import util
+
+class BuddyIconCache(object):
+    """Caches icons on disk and finds them based on md5 hash."""
+    def __init__(self):
+        ppath = env.get_profile_path()
+        self._cachepath = os.path.join(ppath, "cache", "buddy-icons")
+        if not os.path.exists(self._cachepath):
+            os.makedirs(self._cachepath)
+
+        self._cache = {}
+
+        # Read all cached icons and their sums
+        for fname in os.listdir(self._cachepath):
+            m = md5.new()
+            data = self._get_icon_data(fname)
+            if len(data) == 0:
+                continue
+            m.update(data)
+            printable_hash = util.printable_hash(m.digest())
+            self._cache[printable_hash] = fname
+            del m
+
+    def _get_icon_data(self, fname):
+        fd = open(os.path.join(self._cachepath, fname), "r")
+        data = fd.read()
+        fd.close()
+        del fd
+        return data
+
+    def get_icon(self, printable_hash):
+        if not isinstance(printable_hash, unicode):
+            raise RuntimeError("printable_hash must be a unicode string.")
+        try:
+            fname = self._cache[printable_hash]
+            return self._get_icon_data(fname)
+        except KeyError:
+            pass
+        return None
+
+    def add_icon(self, icon_data):
+        if len(icon_data) == 0:
+            return
+
+        m = md5.new()
+        m.update(icon_data)
+        printable_hash = util.printable_hash(m.digest())
+        if self._cache.has_key(printable_hash):
+            del m
+            return
+
+        # Write the icon to disk and add an entry to our cache for it
+        m.update(time.asctime())
+        fname = util.printable_hash(m.digest())
+        fd = open(os.path.join(self._cachepath, fname), "w")
+        fd.write(icon_data)
+        fd.close()
+        self._cache[printable_hash] = fname
+        del m
diff --git a/services/presence2/presenceservice.py b/services/presence2/presenceservice.py
index 923a6d44..7a28fe1b 100644
--- a/services/presence2/presenceservice.py
+++ b/services/presence2/presenceservice.py
@@ -16,6 +16,7 @@
 
 import gobject
 import dbus, dbus.service, dbus.glib
+import buddyiconcache
 
 
 _PRESENCE_SERVICE = "org.laptop.Sugar.Presence"
@@ -31,6 +32,11 @@ class NotFoundError(dbus.DBusException):
 
 class PresenceService(dbus.service.Object):
     def __init__(self):
+        self._buddies = {}      # key -> Buddy
+        self._activities = {}   # activity id -> Activity
+
+        self._icon_cache = buddyiconcache.BuddyIconCache()
+
         bus = dbus.SessionBus()
         self._bus_name = dbus.service.BusName(_PRESENCE_SERVICE, bus=bus)        
         dbus.service.Object.__init__(self, self._bus_name, _PRESENCE_PATH)