Akamai & the CDN Price Wars

37 thoughts on “Akamai & the CDN Price Wars”

  1. Well I think a big one you missed out here is Amazon, with their S3 and other offerings is also taking a HUGE chunk out of the CDN network. One service I was advising on went with S3 instead of a CDN because it enabled them to very easily and inexpensively setup their own service, albeit not as fully covered as others but sufficient to their needs. Also is Google not gearing up to do this themselves? Shouldn’t that not frighten investors.

  2. There is no evidence of a “possibility” that video consumption is flattening. Increasing consumption of long-form content (via IPTV/ITV) is going to push video mix to well above 80% of total Internet traffic from around 50% today.

    Most of AKAM’s business today is not video, it is traditional web acceleration, priced on a $/GB delivered basis. Their distributed infrastructure simply cannot be scaled as cost effectively as more centralized systems such as Limelight, S3, and Google who can always push harder on $/GB.

  3. @Random_Graph:

    IPTV traffic won’t help Akamai because it is on private networks operated by the Telco’s. Akamai is only relevant to traffic on the public net.

  4. We’ve seen many generations of CDN companies arrive to compete in the market and then vanish. These arrivals are often accompanied by articles talking about price wars, deal losses, and decreasing margins. Yet these articles never show any analysis to back up those claims. Stock price movement cannot be correlated with anything but the movement of stock price. Enron used to have a stock price…

    Content delivery networking is a crucial component of the internet- you see the delivery from CDNs during just about every minute of time you spend online.

    But the welcome arrival of new competitors does not instantly guarantee the failure of those who already have existing business. There is plenty of room for all types of vendors in any market.

    P.S. For all your CDN vets- remember Microcast, Cidera, Enron Media, Ibeam, Axient, Sonicity, Inktomi, and Volera?

  5. I’m waiting for Amazon to release this as a utility service built on S3 and EC2. I did some work making a java servlet filter to make the process of automating the upload of files to S3 a seamless process, thereby creating a poor man’s CDN. If the latency on S3 was lower or if it was possible to do this, I’m sure that Akamai would lose the bottom half of their business. More here:

    http://www.whirlycott.com/phil/2006/12/18/announcing-s3cdnfilter-possibly-a-cute-little-idea/

  6. Surprised that no one has mentioned peer-assisted content delivery services. Managed peer networks reinforcing traditional CDNs…this is getting interesting!

  7. While I don’t disagree with Om’s idea that many companies are now competing with one another, it’s not fair or accurate to list companies like Panther Express going up against Akamai. Panther Express does not support streaming media via any streaming protocols, they only support downloads. So that means that they can’t do streaming of Flash or Windows and can’t do any delivery for live events.

  8. I don’t believe that a negative cloud should be cast over the entire CDN sector. Yes, there is a price war starting to occur but in more of the CDN commodity services. But you need to dig deeper and take a look at the innovation that is being brought into the CDN business like that at Internap, symbol INAP, who just reported a great quarter on 7/31 and raised both their 2007 guidance as well as their guidance for 2008. INAP had done a great job in integrating its recent acquisition of Vitalstream and can now offer its customer a suite of CDN services now including Vitalstream’s ad insertion apps to its proprietary route optimization algorithms that are the backbone of its 100% uptime SLAs. So don’t paint all of the CDN players with the same brush. And do yourself a favor and take a better look under INAP’s covers!

  9. Excuse the late response, however I have enjoyed the thread resulting from Om Malik’s post and wanted to comment. I am conducting market analysis in regards to the price and service break down among the CDN vendors. Their has been much recent discussion as price war debate continues to march onward however their seems to be limited factual information or details.

    For example I would debate that the “price wars” are NOT the sole or even a key reason for Akamai’s market decline. They are well diversified from web performance product standpoint, with CDN and web acceleration as core offering. They stand in a unique and strong position in the CDN space. Furthermore the markets have been turbulent over the past few months with many moving parts that contribute to the decline.

    While the competition is fierce which will undoubtedly impact and contribute to shaping the marketplace, it is also important to understand that the CDNs range greatly in terms of core competence, service offerings, customers that they are targeting, etc. Thanks!

  10. It seems the price wars may have taken a different turn… Take a look at SimpleCDN, they offer flat-rate CDN delivery pricing. No bandwidth or usage charges… will this impact the big guys, and will they move to this model as well?

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