Sockeye Spawns Service

Hot on the tail of other startups pursuing routing optimization, Akamai spinoff Sockeye turns it into a service

December 3, 2001

4 Min Read
Sockeye Spawns Service

The IP routing optimization business is heating up. Sockeye Networks, which raised $28 million in a single round of funding earlier this year, today launched its GlobalRoute service and announced its first customer.

Focal Communications Corp. (Nasdaq: FCOM), a national communications provider, has successfully concluded its trial of GlobalRoute and has deployed the service in its IP network. Sockeye says that eight other companies are either currently testing the service or are about to fully deploy it.

This announcement comes just as the IP routing optimization market is getting off the ground. Sockeye’s two main competitors, NetVmg Inc. and RouteScience Technologies Inc., have both recently announced products of their own (see NetVmg: A Bandwidth Cost Cop and RouteScience Soups Up IP ).

But unlike RouteScience and NetVmg, Sockeye is using a service model instead of selling systems outright. The service will collect data on Internet performance using technology licensed from Akamai Technologies Inc. (Nasdaq: AKAM). Sockeye is the only company with rights to Akamai’s network of more than 13,000 servers on over 1,000 networks. The exclusivity contract between Akamai and Sockeye is good for five years, says Jay Seaton, chief marketing officer for Sockeye.

”The fact that Sockeye has access to Akamai is key,” says Elisabeth Rainge, director of network management for IDC. “It brings more dynamic knowledge into the picture, and that’s important. Akamai is an important starting point.”

Using information from Akamai, Sockeye identifies congestion at particular points of presence or peering points and then uses its own proprietary algorithm to collect more specific data regarding that segment of the network. Based on this information, GlobalRoute can do a couple of things. First, it can generate custom reports for enterprises or service providers, which can be used for future network planning. It can also be pre-programmed to automatically reroute traffic to a less congested link if a threshold has been exceeded on a particular route.

Large enterprises and service providers already use collected data to optimize their routes, but using the Sockeye service or an appliance from NetVmg or RouteScience automates that process, ultimately making it more cost effective, says Rainge.

Sockeye claims that the GlobalRoute service improves 70 percent of BGP (Border Gateway Protocol) routes and lowers bandwidth and network management costs by up to 40 percent for businesses and service providers that use more than one connection to the Internet.

While Sockeye’s relationship with Akamai may be its biggest competitive differentiator, the relationship has raised some eyebrows. According to a Reuters report published in August of this year, Sockeye, originally called Arriva, was actually formed as a subsidiary of Akamai. In January 2001, Akamai sold a majority stake in Sockeye to outside investors for $28 million cash. The sale included a five-year licensing deal that requires Sockeye to pay Akamai a minimum monthly license fee of $1 million plus royalties based on Sockeye's revenue from using Akamai's technology, says the Reuters report.

Sockeye accounted for 11 percent of Akamai's $83.3 million in revenue during the first half of this year. Akamai holds a 40 percent stake in Sockeye; its chairman George Conrades sits on Sockeye's board of directors; and some of Akamai's largest investors -- Baker Capital Corp., Battery Ventures, and Polaris Venture Capital -- are financing Sockeye and continue to hold large stakes in Akamai.

Some sources have charged that Sockeye was formed to reinforce Akamai’s business, which has still not turned a profit. But a spokesperson for Akamai denies these claims and says that Sockeye is a completely independent company that simply licenses its technology.

Regardless, GlobalRoute is not a cheap service, and Sockeye will have to prove to customers that it is really worth the cost. Pricing is scaled based on the number of locations and the number of links at each location, with higher rates for higher-capacity links. For example, two fractional T3 (45 Mbit/s) lines in a single location costs $4,500. Two OC3 (155 Mbit/s) connections in a single location would be about $12,000. There is also a $6,000 non-recurring charge per location. Discounts are offered for multiple locations and multiple links.

Jay Seaton, chief marketing officer, says that some high-end users with high traffic rates would likely require at least three locations each with three links per location. For these customers -- large enterprises with multiple locations and multiple providers or large service providers -- the monthly cost could soar from $20,250 for three fractional T3 links to as high as $54,000 for three OC3 links at each location. Also factor in the one-time fee of $18,000 -- $6,000 for each location where gear is installed. For three locations with three OC3 links per location, the price for the year could be as high as $666,000.

The bottom line is that optimizing IP routes isn’t cheap. Even Sockeye’s competitors are expensive. RouteScience PathControl ranges in price from $140,000 to $250,000, depending on configuration, and that is per device. NetVmg sells its Flow Control Platform at a price starting at $20,000 but ranging up to hundreds of thousands of dollars, depending on the size of the installation.

— Marguerite Reardon, Senior Editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like