CDNetworks Pushes Into US
The South Korea-based content delivery network has clearly put itself out there. "We contrive striving to provide best services to our customers worldwide," the company eloquently proclaims on its Website.
While contriving and striving, CDNetworks is now listed as the No. 3 content delivery network (CDN) in the world by some analyst reports, behind Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW). CDNetworks says it's growing and claims to have about 70 percent market share of the content delivery business in South Korea, delivering about 10 percent of all Web traffic there.
CDNetworks is now poised to expand its service offerings and sales staff in the U.S. (See CDNetworks Expands in US.) That would put it in direct competition with a rapidly expanding number of CDNs that are all hoping to cash in on the burgeoning opportunity to provide delivery for large files and rich media here.
In addition to Akamai and Limelight, companies like Level 3 Communications Inc. (NYSE: LVLT), Internap Network Services Corp. (Nasdaq: INAP), and VeriSign Inc. (Nasdaq: VRSN) have bolstered their content delivery stories through acquisitions over the past few years. There are also an increasing number of startups in the CDN space, including players like CacheLogic , NaviSite (Nasdaq: NAVI), and Panther Express Inc. (See CDN Startups Talk Tough, CacheLogic Pushes Hybrid P2P, CacheLogic Fires Up Its CDN, Level 3 Expands CDN, and Level 3 Looks for Big CDN Push.)
CDNetworks entered the North American market in October 2006. Since then, it has deployed nine nodes in strategic markets including New York, Los Angeles, Chicago, Atlanta, Seattle, Dallas, Denver, and San Jose, Calif., where its U.S. headquarters is located. The company has plans to expand to 30 nodes within the next year.
Over the past 10 months, CDNetworks has gained 30 customers in the U.S., with particular strength in the online gaming market. Named customers include game publishers Codemasters, K2 Network, Nexon, and Joymax.
The company's U.S. VP of business development, Steve Chung, says its architecture "is optimized for heavy, rich media delivery." Chung points to the company's high market share for streaming large media files in the Korean market. "We've been doing this for seven years in the most connected market in the world."
CDNetworks sees differentiation in the CDN market coming from value-added applications and customer service. "The service element is the critical aspect of content delivery," says Chung.
But some question whether CDNetworks can compete on customer service with its current headcount in the U.S. The company has eight employees serving the market, primarily in sales and sales engineering activities. It hopes to expand headcount to 25 employees over the next year, with employees working out of the San Jose headquarters and in strategic regional offices throughout the country.
"They don't really have a sales organization or a sales strategy," says Dan Rayburn, executive VP of industry group StreamingMedia.com. "They have a ton of hard work ahead of them."
As a result, Rayburn thinks the company may have a harder time convincing customers to use its service. "They're really just starting in the U.S.," he says, "and it's not going to happen as quickly as they think."
While expanding its offerings overseas, CDNetworks will continue to see more competition back at home as U.S.-based CDN players push deeper into the Asia/Pacific market. Limelight, for instance, announced that it was establishing a Japanese subsidiary two weeks ago. (See Limelight Adds Japan Subsidiary.)
The need for CDNs to expand to more markets is a trend that should continue as globalization makes content much less localized, says Limelight founder and chief strategy officer Mike Gordon. [Ed. note: He really said that.] "Our audience is increasingly global," he says, because "most content now is delivered everywhere."
— Ryan Lawler, Reporter, Light Reading