Big Changes in Store for CDNs

Verizon's recent acquisition of fast-growing content delivery network (CDN) Edgecast appears to offer the best chance yet to raise an effective competitive challenge to Akamai Technology's longstanding domination of the worldwide CDN market, combining as it does a major international backbone provider with a midsize, fast-moving content delivery specialist. It remains unclear, however, if Verizon will in fact be able to successfully challenge Akamai's market leadership.

While additional consolidation seems almost inevitable in this segment, this is not an area of the market that will lend itself to easy monopolization by large (and slow) carriers, and opportunities for smaller players that can offer enhancements in content delivery and customer experience will remain.

CDNs are widely distributed computer networks that facilitate rapid distribution of websites, video, and other varieties of Internet "content" by replicating and storing copies worldwide to speed transmission and enhance viewer experience. They have become steadily more crucial with the explosion of video and the seemingly unstoppable growth of the Internet, and in the face of service modes such as mobile and cloud that add new obstacles and complexities to content delivery.

As the centrality of these delivery quality issues are increasingly recognized, the improved speed and quality of viewer experience CDNs are designed to promote are becoming an intensifying concern for the "C-suite" of top company executives worldwide. Awareness that slow-loading sites mean money taken directly out of an enterprise's pocket is taking greater hold high up in organizations.

Major content providers, most prominently Netflix Inc., are meanwhile rapidly expanding their own internal do-it-yourself (DIY) CDNs, putting limits on what could otherwise be phenomenal traffic growth for CDN specialist firms.

The focus of the CDN segment in building revenues and profitability will continue to shift from the basic task of "bit delivery" of "static" (unchanging) content toward "value-added services" that accelerate and optimize "dynamic" (continually changing) web content, as well as provide security and potentially evolve varieties of managed services. However, ballooning video volumes worldwide, which fit primarily into the "static" category, ensure that basic CDN will also remain a healthily growing portion of the segment.

The Heavy Reading Insider, "CDN Operators Get Set for Some Major Changes," examines the current state of the CDN market in light of the major changes shaping it. It reviews the market's structure, including the role of carriers and multiple system operators (MSOs), market shares of significant CDN providers, as well as current market trends and issues, including the evolution of value-added services, DIY CDNs, the software sale model, dual CDN strategies, standardization and federations, and profiles 13 market players with significant impact on this segment.

— Steve Koppman, Analyst at Large, Heavy Reading Insider

CDN Operators Get Set for Some Major Changes, an 18-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,995. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.