Limelight Grapples With Growing Pains

Just as it readies for an IPO, Limelight Networks Inc. (Nasdaq: LLNW) continues to experience frequent network outages, industry sources tell Light Reading.

One industry source says the outages have been occurring regularly for roughly a year.

One of Limelight's customers, application delivery company Opsource, acknowledges performance problems with the Limelight network, but claims it remains a happy customer.

Opsource CTO John Rowell tells Light Reading that Limelight is a young company and is suffering from growing pains. "They are a very rapidly growing company that is experiencing some of the challenges that come with success," Rowell says. "Certainly you're going to have downtime and you're going to have uptime, and vendors are rated on their reaction more than anything else, and we've found that they've been very focused." Rowell declined to say how many times the Limelight Network has been down over the past two months.

One source suggests that Limelight's rapidly growing customer list may be putting a strain on its $50 million network.

Limelight chose not to comment for this story.

Recently, Limelight has said it now moves content for "more than 700 of the world's top media companies." Some of the big ones include the Microsoft Corp. (Nasdaq: MSFT) Xbox Live gaming site, video aggregator Akimbo Systems , Amazon Unbox, FoxNews.com, MSNBC.com, MySpace , and the video sharing phenom YouTube Inc. These companies pay Limelight to host and cache their content at strategic places on the Internet backbone so that it can be delivered to the end user with fewer hops. If part of the network is unavailable, the content may have to take a circuitous route to the user. As the content makes more and more hops to get to the user, a "time out" becomes a real possibility.

Limelight is said to use a more centralized approach to architecting its network than its larger rival Akamai Technologies Inc. (Nasdaq: AKAM). Limelight says it has caching servers in 25 points of presence around the world, while Akamai boasts some 20,000 servers spread over 900 points of presence worldwide. (See Akamai Shows No Jitter in Q4.)

"Akamai's 'decentralized,' massively-distributed approach is superior to centralized approaches using a limited number of data centers," an Akamai spokesman writes in an email to Light Reading. "It is not possible via a centralized model to scale, and to continue to add more and more customers."

VeriSign Inc. (Nasdaq: VRSN) VP of global marketing Todd Johnson says CDNs are by nature a difficult thing to manage.

"The real challenge is that you have to manage a broad set of complicated assets connected between a lot of different sites. It's a very distributed network with network nodes in locations where you don't have people," Johnson also points out that the reliability of CDNs hinges on the reliability of the service provider networks used to move content out to the caching servers.

Limelight's customers aren't the only ones with a lot riding on the CDN's performance and reliability. Goldman Sachs & Co. bought a big chunk of the CDN when it led a monstrous $130 million funding round for the company last July. Seven months later, the company is rumored to be positioning for an IPO. (See Limelight Raises $130M and How Likely Is a Limelight IPO?)

"What really makes this interesting is that it is my understanding that when Goldman Sachs bought 53 percent of the company, approximately $25 million dollars was to be used to grow and improve the network," one investment community source tells Light Reading. "So what is Limelight doing with the money, and how will this trend affect earnings and an IPO?"

Limelight is headquartered in Tempe, Ariz.

— Mark Sullivan, Reporter, Light Reading

Alpine 12/5/2012 | 3:13:02 PM
re: Limelight Grapples With Growing Pains Shouldn't come as much of a surprise. Scaling a network isn't completely easy. However, some of this may be self inflicted.

1. Building a network with used equipment, second rate routers (Foundry) and cheap servers (microage) does not exactly lend itself to quality and reliability.

2. Let's debunk the funding round once and for all. Nearly $100M of the funding round went into the pockets of existing shareholders and founders. This was a pre-ipo liquidity event not a massive funding round designed to scale the operations.

3. Who's running the show that has run large scale businesses or network operations before?
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