Akamai Puts The Entire CDN Ecosystem On Notice

During the 2015 Investor Relations Summit, Akamai presented many interesting data points to its audience. Some of the data points were financial in nature, and others emphasized “new features, products, and services” across its various segments, including Media, Security, Network Operator, Wireless, and B2B CDN. Surprisingly, many of the features are innovative, futuristic and well thought out. It seems Akamai is now committed to being a leader in feature-set innovation. Is it possible that Akamai has grown tired of hearing all the buzz in the start-up CDN community, in regards feature-set innovation? The presentation clearly demonstrates that Akamai is gearing up for war against the competition. Listed below are some of the more interesting facts pulled from the Investor Relations Summit presentation.

 Akamai’s Data Points

  • 359 Customers spend over $1M annually
  • Akamai is connected to 1300 networks, 100+ countries, and has 2700 PoPs/locations
  • Cash gross margins increased from 76.9% in 2013 to 78.4% in 2014
  • In 2014, peak traffic on Akamai’s Network was 26Tbps+
  • General Market Stat: Last mile capacity is 10Pbps and Core (Data Centers) capacity is 500Tbps globally. User demand will be 25Pbps in the future, thus not enough capacity in the network to support the user community
  • Ion Premier: A game changer feature in the website performance category
  • 48% of Fortune 500 are customers today
  • 38% of Fortune Global 1000 are customers today
  • Theme is to “Go Deep within Install Base”
  • 86% Carrier Reseller Revenue Growth from 2013 to 2014
  • General Market Stat: FIFA World Cup Traffic increased from 29PB in 2010 to 222PB in 2014
  • General Market Stat: Winter Olympics traffic increased from 12PB in 2010 to 81PB in 2014

Google, Amazon, & Facebook: The X-factor in the CDN Ecosystem

Technology innovation in the wireline and wireless industry is experiencing unprecedented growth. In a few years, Gbps connectivity to the last mile eyeball networks (US wireline & wireless) will become the norm. Everyone and everything that participates in the Content Value Chain, from creation to delivery will be impacted. GPON is driving the wireline business to new heights, and the upcoming 5G, which allows mobile operators to combines LTE and unlicensed wireless spectrum into one offering, is a game changer. Gbps connectivity to each user is no longer a dream, but a reality that is five years away. Yes, there are many skeptics, especially those in the carrier business that say this type of service is years and years away. However, one must always consider the X-factor.

The X-factor is the company that completely rewrites the rules of the game. Sometimes they appear out of nowhere, and other times its gradual. Two examples are WhatsApp and AWS. WhatApp is an X-factor company that completely obliterated a billion dollar market segment for carriers, practically overnight. AWS is another X-factor company that rewrote the rules for computing. In the wireless and wireline infrastructure space, the X-factor companies are Google, Facebook, and Amazon. Google is now an MVNO. Facebook and Amazon are right behind Google. Prediction: Amazon and Facebook will launch an MVNO or WiFi service later this year. Control of the last mile eyeball networks means more control of the customer experience, from end to end. At this point, it’s no longer a choice for Amazon and Facebook, its a must, because if Amazon fails to act, they will be at a severe disadvantage compared to their biggest rival, Google.

WiFi, Wireless, GPON, CDN

Business Model Chaos: From Wireless to CDN to Security

The technology industry is going through a dramatic transformation unlike any time in the past. Once non-related tech segments are converging across the globe, and those that are likely to be impacted the most are the incumbents. Apple plans on making cars, Google is becoming a wireless carrier, Facebook and Amazon are building middle mile fiber infrastructure across the world, Facebook is taking on Cisco, Amazon is taking on Fedex/UPS, and wireless bandwidth speeds are likely to increase 100x by 2020, as Ericsson, Samsung, Alcatel-Lucent, and other wireless infrastructure players bring mind-boggling innovations to market. CEOs are playing it cool during the day, but at night time, it has to be a nerve racking experience trying to figure how these innovations are going to disrupt their once comfortable market positions.

Recent Developments

  • Sundar Pichai, an SVP at Google in charge Android, Chrome and Google Apps recently stated “we don’t intend to be a network operator at scale” and “we are thinking about how WiFi and cell networks work together and how to make that seamless”
  • According to The Information, Google CEO Larry Page has not kept it “secret of his contempt for large wireless and wireline players, which he feels aren’t innovating fast enough”
  • Deutsche Telekom is investing heavily, along with many other companies in 5G technology; supposedly, 5G is going to be “hundreds of times faster than LTE
  • Researchers at University of Surrey tested 5G speeds in excess of 1Tbps
  • Samsung announced “two industry milestones in the development of 5G” achieving 7.5Gbps speeds, and stable connection speeds at 1.2Gbps
  • Grande Communications, a small carrier in Texas, beat Google Fiber and AT&T in offering 1Gbps FTTP (fiber-to-the-premises). In 3-5 years, 1Gbps in the US is likely to be the standard
  • Akamai plans on hiring 1,000 employees this year, with many of those openings in their new unit “Emerging Mobile Products Business” – not a coincidence, as they see major disruptions in wireless infrastructure coming soon

The list of major breakthroughs goes on for pages. These innovations will disrupt incumbents and start-ups including AT&T, Verizon, CDNs, Cloud Providers, Automobile companies, and so on. What kind of impact will it have on industries? Below are some worse case scenarios:

Worse Case Scenarios

  • In 5 years, bandwidth limitation in the last-mile (wireless and wireline) will disappear, ushering a new era of high definition and high resolution applications and services
  • Usage based businesses models that make money by charging on a per GB will cease to exist (on the consumer side only)
  • New business models will emerge, as business transform themselves into global cloud application delivery networks
  • Google will become a major wireless carrier competing with AT&T and Verizon
  • DDoS attacks will jump into the Tbps, as Gbps bandwidth becomes the norm for home connectivity
  • CDNs will need partner with each other and carriers, in order to fend off the large Tbps DDoS attacks
  • CDNs focusing on ecommerce will get into the video delivery business, as virtual reality takes hold with online retailers

Akamai Moves to Make $5B a Reality in 2020

Akamai has been busy in Q1 of 2015. First, they made a strategic investment in Saguna Networks. Next, they announced a plan to hire 1,000 employees this year. Thereafter, Akamai acquired Xerocole, a start-up offering an innovative DNS platform to the service provider market. Xerocole, based in Boulder, CO was founded in 2010, and has 10 employees. A bulk of the team previously worked at Sandvine. Xerocole’s partners include Yahoo, Namespace, Symantec, Damballa, Securifi and Lastline. The acquisition was a brilliant move, and it adds cool DNS technology to Akamai’s portfolio. Plus, they get a handful of brand name partners and customers, and acquire a solid engineering team well versed in DNS. An infrastructure company can never have enough DNS engineers, caching engineers, or software engineers with a security focus.

Akamai has enough cash on hand to make a dozen of these type of acquisitions this year and next. However, what we are patiently waiting for is the “game changer” acquisition, and it can even be a small start-up. Adding an Advanced Threat Protection (ATP) feature set to the portfolio would do wonders for Akamai. Ironically, one of Xerocole’s partners is Lastline, a mini-version of FireEye. If Akamai made a move on Lastline, it would be a very disruptive move, and it would send ripple effects throughout the CDN market and pure-play security industry. In short, it would put Akamai on a collision course with FireEye, as Akamai would have single handily converged once two separate industries into one. Its a long shot, but these are the types of activities that will help Akamai reach its $5B revenue goal by 2020.

New Premium Subscription Service

Bizety is now offering a premium subscription service to all members of the global community. For a monthly fee, members receive the Weekly Intelligence Digest”, which is the most current, and insightful report on the content delivery industry. We track an astonishing sixty five companies, from six different sectors, and offer commentary on twelve of the most important developments of the week. In addition, twice a month, we analyze and report on a disruptive technology that is bound to impact the content delivery industry, in one way or another. The sectors and companies we track are listed below:

Sector Coverage

  • Content Delivery Networks
  • Internal CDNs
  • Transparent Caching
  • DDoS Mitigation
  • Content Exchange
  • Cyber Security
  • Software Defined Network

Continue reading

 

Battle of the Last Mile: Google vs AT&T and Verizon

The Internet Giants (Google, Facebook, Microsoft and Amazon) have been on a rampage investing in middle mile infrastructure, more specifically dark fiber, submarine cable systems, and to some degree, spectrum for a while now . The two primary reasons: 1) to lower transit cost structure and 2) to exercise greater control of their content delivery efforts. Google is said to have over 100k fiber route miles in place. However, we believe it’s much more than that, since Google has been buying dark fiber close to a decade now. When content providers like Google buy dark fiber, it causes downward price pressure on the network assets, making it more of a commodity or a dumb pipe. That’s one of the reasons Verizon is selling off some of its wireline operations.

Also, lets not forget that another battle is being fought in the last mile between Google and AT&T – Verizon. The last mile is “gold”, because whomever owns the last mile, ultimately owns the customer experience, not to mention, that a bunch of services can be sold to the end user (via last mile). Google understands it, and so does Apple, but Google is taking the lead in this effort, and taking the fight for control of last mile to AT&T and Verizon’s door step, not only in the wireline business, but also in the wireless. It doesn’t take a rocket scientist to figure out what Google is up to.

Googles Expands Efforts from Middle Mile to Last Mile
  • Middle-Mile: Google invest in dark fiber, submarine cable systems, and spectrum to a small degree
  • Last Mile: Google Fiber is expanding its footprint across the US, and the recent ruling on Net Neutrality will likely help them grow faster to more cities
  • Wireless Last Mile: Google partners with Sprint and T-Mobile to sell wireless services
  • Wireless Last Mile: Google’s rumored upcoming MVNO service with Sprint and T-Mobile allows them to “hunt for the best available cellular or Wi-Fi signal to route voice, text message and data traffic”
  • Wireless Last Mile: Google conducts test on the 71-76 Ghz and 81-86 Ghz millimeter wave bands, which means “Google may be using the millimeter wave bands to test the transmission of large amounts of data over short distances”
Is Google Planning on Buying Low-band spectrum Next Year

The spectrum auction next year is more valuable than the recent AWS-3 auction, because it give better reach into homes and offices. According to a recent article, “Wireless spectrum is considered the life-blood of the wireless industry”; AT&T and Verizon control the “vast spectrum of licenses throughout the country”; the “upcoming incentive spectrum auction is likely the last major auction the FCC will have for several years”.

Is all this activity a precursor to Google’s next move? Google selling Sprint and T-Mobile services might only be warm up practice for something bigger, like spending billions in acquiring low-band spectrum next year. If there is anyone that can outspend AT&T and Verizon in next year’s auction, that would be Google, with its $64B cash war chest.

Google - Wireless Last Mile

Instart Logic Introduces SmartSequence, a Breakthrough Technology

Instart Logic, a pioneer in software-defined application delivery, has introduced a new optimization technology called SmartSequence. SmartSequence “leverages machine learning to optimize how HTML and Javascript code are loaded in the browser”. The techniques of machine learning, deep learning, artificial intelligence, and algorithm-driven technologies are big in the world of cyber security, where innovation driven companies like FireEye use them to solve the most pressing problems, such as detecting and mitigating unforeseen threats. Instart Logic has taken a similar approach to content delivery, and developed machine learning technologies that solve very complex problems associated with content acceleration, mobile optimization, and the acceleration of dynamic content.

So far, the performance results have been astounding, and Instart Logic continues to raise the bar of innovation to new heights within the ecosystem. No surprises there, since Instart Logic is well funded, and employs scientist from various backgrounds to drive home feature set innovation and product development. These scientist bring fresh out-of-box perspective to the world of content acceleration and optimization. One interesting note that the executive team mentioned on a call last week, is that Instart Logic has gone through various phases in their life cycle. First they learned to crawl, then walk, and finally run. Instart Logic really gets it, and they are executing extremely well, introducing new features and services at a furious pace, getting no rest in between. Working hard, with no rest in between projects, is the only way they might be able to make a dent in Akamai’s $2B armor.

SmartSequence Benefits

  • Leverages cloud-client architecture, the next cloud compute & architecture model in application delivery
  • Based on machine learning techniques that optimizes Javascript and HTML loading in the browser
  • The technology learns the code in the webpages, then builds a behavioral profile from all the interactions happening between the users, website and browser activity, so it can intelligently optimize the flow of content, thus enhancing the customer experience
  • Team of scientist worked diligently over the last year to create SmartSequence
  • Instart Logic scientist were able to solve many of the problems that occurred in the deployment of FEO

Amazon interested in Akamai? Seriously

Is Amazon really gunning for Akamai? According to an Oppenheimer analyst, possibly. Akamai’s stock price has been trending upward for the last week, and its stock price closed at $71/share on Friday, valuing them at $12.7B. At the other end, Amazon’s stock closed at $378/share, valuing them at $178B. Although Amazon earned $29B ending Dec 31, 2014, net income was a paltry $214M. When looking at Amazon’s balance sheet ending Dec 31, 2014, they have $3.2B left over when current assets are subtracted from current liabilities, which means they lack a Google like cash position. Disclosure: “I’m not a financial analyst and I’m not qualified to give any financial advice, so please don’t use this rant for any investment purposes”. Continue reading Amazon interested in Akamai? Seriously

Battle of the Middle Mile: Internet Giants vs AT&T and Verizon

Verizon and AT&T have been competing against each other in the regulated and unregulated markets for decades, in all areas of the business, including wireless, wireline, metro, data, voice, IP, data center, and so on. It’s co-petition at its finest, and they’re happy coexisting with each other, regardless of their rivalry, because they’re still making billions in profit every year. Competitively speaking, when AT&T and Verizon stare at each other, its like looking in the mirror, where each one can easily predict what the other one plans on doing next, since they’ve been swapping headcount for decades. In hindsight, no one, including Zayo, Frontier, T-Mobile, Sprint, or Windstream have ever posed a serious threat to this dynamic-duo.

However, times have changed, and a new gang of Internet Giants has emerged, and they have taken it upon themselves to disrupt the global telecommunications industry once and for all. Google, Facebook, Microsoft, and Amazon have invested billions in middle mile infrastructure. These Internet Giants have the economic muscle and tech savvy to outspend and out-innovate Verizon and AT&T. Google is leading the charge, and Facebook, Microsoft and Amazon are closely behind. Google is making the most waves, and their investing in a multitude of transports, including dark fiber, underwater connectivity, spectrum, wireless, Wi-Fi, and so on. Google, Facebook and Amazon operate in a world where everything they do is unconventional, bringing a whole new dynamic to the competitive landscape. It doesn’t take a rocket scientist to figure this one out, but if AT&T and Verizon want to compete effectively against the Internet Giants, it will have to become more like them.

Internet Giants Infrastructure Investments

Google-vs-AT&T

Impact on CDN Ecosystem: Frontier’s Acquisition of Verizon’s Wireline Operations

Citizens Utilities Company was once a small time telephone company serving small communities and rural areas in the US. In 2000, they changed their name to “Citizens Communications Company”, and eight years later to “Frontier Communications Company”. Frontier has grown tremendously over the last few years, and is becoming a major RBOC/LEC (Local Exchange Carrier) in the US, especially now that they announced the acquisition of Verizon’s wireline operations in California, Texas and Florida for $10.5B.

Frontier generated $1.14B in sales ending September 30, 2014, and the acquisition will enable them to double its user base and revenue. The three states involved in the sale generated $5.7B last year, which means Frontier will generate $10B+ annually when the sale is complete. The acquisition will inject some life into Frontier, whose sales have been declining for the last several years. Included in the sale are the following:

  • 7M voice clients
  • 2M video clients
  • 2M broadband connection
  • Half of this network running on fiber (FiOS)
  • Three states under sales generated $5.B in 2014

This acquisition comes after Frontier Communications acquired AT&Ts wireline assets in Connecticut for $2B last year, and Verizon’s wireline operations in 12 states, a few years back.

What does this mean for the CDN

Today, when CDNs buy multiple 10Gbps Internet Ports from many carriers, rarely does the name Frontier Communications come into the conversation. That is definitely changing in the next 12-36 months, as Frontier is now a major LEC. Frontier is joining the ranks of AT&T, Verizon and CenturyLink as large, residential, last mile service providers in the US. For classification purposes, we call the group of large last mile providers “Tier 1″, as they own the residential last mile. All other carriers and CDNs must use the facilities of the Tier 1 to for content delivery. The “Tier 2″ Carrier in the US is Level 3, and although Level 3 doesn’t own the residential last mile, they are always included in the carrier mix that CDNs use in their infrastructure, because they have a world class IP Transit footprint in place.

Akamai Acts On Recommendation and Acquires Stake In Saguna Networks

On January 11th, we posted a recommendation that Akamai should acquire Saguna Networks. Low and behold, one month later, Akamai acquires a stake in Saguna Networks. In due time, Akamai will become an innovation leader in the RAN, because they will be able to leverage and integrate Saguna’s RAN based technology into its CDN platform. Saguna is one of the very few, if not the only pure-play RAN based CDN offering products for Mobile Operators in that part of the network. This was a brilliant move on Akamai’s part, and we give it an “A” Grade. Akamai isn’t resting on its laurels, but they continue to make strategic moves that keeps them ahead of the game. If only Limelight Networks would do the same. The question now is what is Akamai doing next.

Disclosure: I’m not a Financial Analyst, and I did not talk to, or advise Akamai on this transaction in any way. I just made an educated guess, as to what I believe is the best fit for Akamai, based on their current product portfolio. Please don’t use this rant for investment purposes.

Interview with Vick Vaishnavi, CEO of Yottaa (Part 2)

Yottaa CEO, Vick V. Here is the second half of our interview with the CEO of Yottaa, Vick Viren Vaishnavi. In this portion of the interview, Vick explains Yottaa’s plans moving forward and what to expect from the company in the coming years. Additionally, Vick goes into Yottaa’s core strengths, how its solutions have evolved and what makes this company different from others in the market. Vick has a refreshing perspective on the CDN market, and we think that the upcoming years hold exciting promise for Yottaa.

Q: As you are aware, there are categories or groups of CDNs in the ecosystem. Some companies are focused on large-scale video streaming like Level 3, Limelight, and Akamai, and others on security like Incapsula, CloudFlare, and Zenedge. What is Yottaa’s focus today? Is it security, video, SDN, wireless last mile, ecommerce?

 A: As for our focus today, you can think of us as a new-age CDN that measures, optimizes and drives business impact by focusing on integrating performance and engagement for end user experience; something a traditional CDN was not designed to do beyond pure performance. Enterprises quantify business impact using industry-specific KPIs. For example, Ecommerce focuses on conversion rates. For other verticals, it could be page views, time-on-site, or goal completions. A typical customer will tell us, “We have implemented Responsive Web Design on several mission critical web applications and need to maximize our desktop and mobile channel impact. Our current infrastructure isn’t able to manage the impact that JavaScript and third party content have on user experience, and addressing customer demands stresses our develop-release processes.”

They want a managed service to take over and automate critical app optimization. Meeting our customers’ requirements and going above and beyond to enhance every end user’s experience by improving contextual performance is what Yottaa is focused on. We are not focused solely on performance improvement – but rather improving performance with the end user’s context in mind to maximize resulting business impact, and do it in real time. If I had to make an analogy, Yottaa is like a German high performance car in that it is focused on the ultimate driving and handling experience for the driver. It has the ability to gauge constantly the driver’s (end user’s) context and road conditions and keeps the driver in control. Contrast that with a pure “muscle car” that provides the driver with a largest engine, highest horsepower but no ability to control and handle the car! Both are cars, both offer performance, but only one offers it “tailored” for the driver. Continue reading Interview with Vick Vaishnavi, CEO of Yottaa (Part 2)

The Most Interesting CDN in the World, CloudFlare

CloudFlare is a rebel, and they thrive on breaking the rules, because it’s engrained within their DNA. That is the sole reason why CloudFlare is the most recognizable CDN brand name in the world, because they take the non-traditional approach. CloudFlare’s bravado behavior makes Matthew Prince the most interesting man in the world, and CloudFlare, the most interesting CDN in the world. One day, Mr. Prince is hobnobbing with the world’s top leaders at the World Economic Forum in Davos, educating folks about cyber threats and mitigation services, and another day CloudFlare is hosting The Pirate Bay, part 2 that is.

If there were two phrases that could describe CloudFlare, it would be “Dr Jekyll and Mr Hyde”, and “they can have their cake and eat it to” :) Is there anything wrong with this approach? Absolutely not. In fact, we are very fortunate to have someone like CloudFlare in our Ecosystem, because it makes it more entertaining. The boxing world has never been the same without Mike Tyson, and neither has the technology industry, without Larry Ellison feuding against the competition, and the same is likely to happen once CloudFlare sells for a billion dollars +. That’s why CloudFlare is the only CDN in the Ecosystem that can do whatever it wants, and still be successful, whether its giving away CDN services and SSL Certs for free, hosting the Pirate Bay, hosting booter services (DDoS for hire), hosting Lizard Kids, or educating the world’s leaders at the most prestigious forums globally. Thank you Mr. Prince for doing something we never thought was possible.

Interview with Vick Vaishnavi, CEO of Yottaa #1

Yottaa, an impressive application-oriented CDN, has kicked off a new stage of corporate transformation. After launching an initial set of Web Application Optimization technology – primarily centered around CDN, FEO, monitoring and security – Yottaa recently extended its technology to optimize the entire customer’s journey and maximizing online and mobile end user engagement. The key takeaway from our latest interview with CEO Vick Viren Vaishnavi is that Yottaa is no longer content with the IT-dominated Web Acceleration approach typical of CDNs. The company’s new executive team is injecting unique insight to evolve the conventional IT-centric view of Application Optimization with a pluggable platform approach. This approach to business technology includes increased automation and built-in intelligence, and intersects areas that have historically been Marketing, eCommerce or deeply Technical silos: analytics, application optimization for web and mobile presence, user experience management, and more.

Vick Viren Vaishnavi, recently brought on to head the company, is a future-focused, enterprise software technology veteran. Beginning his career in networking infrastructure, he has realized success in the areas of analytics, optimization and security. After helping to lead companies like BladeLogic and Aveksa, Vick has become an expert in Data Center Automation, Identity & Access Management, and Application Performance Management. Yottaa attracted his attention with its efforts towards creating a customized end-user experience, and its focus on application optimization. We spoke to Vick about his perspective on the industry and his plans for Yottaa.

Q: You’ve had a lot of success building and selling companies like BladeLogic to BMC for $800M and Aveksa for $300M to EMC. Can you tell us about that experience and how it’s going to help you at Yottaa? Do you see Identity & Access Management at the edge for Yottaa?

A: My passion is bringing innovation to the marketplace, and building successful companies. I definitely plan to leverage my domain expertise in a multitude of different technology areas to continue innovating at Yottaa. You can look forward to seeing it firsthand circa the end of this quarter, particularly in the networking area – think networking from the perspective of an end-user’s experience, and for the first time being able to understand and pinpoint the resulting business impact.

We will bring concepts inspired by Identity & Access Management together with Layer 7 analytics, resulting in increased security. Added features will include real-time bot detection and separation and mitigation of bad traffic to maintain a higher Quality of Service for legitimate traffic, an expanded PCI architecture, and Web Application Firewall enhancements. On the Cloud operations side, we are contemplating a different way to integrate Data Center Automation with those capabilities, which is another area in which I have previous experience.

Q: Initially, when Yottaa built its CDN infrastructure, it was built on top of Amazon and other cloud providers. Today, it seems that Yottaa has a hybrid infrastructure that leverages both dedicated infrastructure and the cloud. What is your plan in regards to your infrastructure and how are you going to evolve it over time?

A: In truth, some of Yottaa’s first patents were for a unique, hybrid architecture and Cloud Service for optimizing Web Applications. In 2014 we expanded our dedicated infrastructure to improve performance and delivery for key geographies. Since I came to Yottaa a few months ago, we have accelerated the process of expanding our infrastructure in three main areas. Continue reading Interview with Vick Vaishnavi, CEO of Yottaa #1

CDN Ecosystem Diagram v15

Bizety is publishing the 15th edition of the CDN Ecosystem Diagram. The noisy, but feature rich diagram keeps track of the movers and shakers within our industry, whether they are start-ups, established companies, or niche players. There have been two changes within our ecosystem over the last few weeks: 1) Azure CDN is no more, as they decided to go the hybrid route, and partner with EdgeCast and 3rd Party CDNs 2) Broadpeak has been added to the Transparent Caching category. Broadpeak is an extremely innovative company based in Rennes France. We’ll be tracking them from here on out.

Latest Updates

  • Microsoft Azure CDN has been removed since they are partnering with 3rd party CDNs
  • Broadpeak has been added to the Transparent Caching category

CDN Ecosystem Diagram v15

B2C & B2B Cyber Security CDN Business Models

Another one bites the dust, and Anthem joins the non-exclusive club of breached entities, whose members include Chase, Home Depot, and thousands more. In the meantime, we can discuss the “yet to come” 4th Generation Cyber Security CDN. Here is a snapshot of four different generations of Cyber Security CDN:

  • 1st Gen: Traditional CDN with basic built-in DDoS protection capabilities
  • 2nd Gen: CDN like CloudFlare that offers CDN + WAF
  • 3rd Gen: CDN like Incapsula that offers CDN + WAF + Imperva Feature Set
  • 4th Gen: In the making

The 4th Gen Cyber Security CDN is going to develop a security feature set that is orders of magnitude more advanced than anything in the market place today. Based on the state of our ecosystem, its at least 5-10 years away. However, here is a hint of what it will look like: Take Palo Alto Networks, FireEye, Shape Security, BioCatch, Splunk and Akamai, throw them in a blender, and there you have it, the 4th Gen Cyber Security CDN (illustrated below).

Shape Security offers a “Botwall” that disguises the login prompt code, and tricks automated bots into thinking its just plain text. BioCatch records click mouse activity, mouse movements, and other behaviors, then creates a profile for an individual user, enabling their system to tell the difference between that specific user, and cyber criminal. Now add these features with a FireEye type platform, SIEM like Splunk, in the CDN last mile, and we get the idea.

 Next-Gen Cyber Security Feature Sets + CDN

  • Palo Alto Networks – App ID
  • Akamai – CDN + Web Application Firewall
  • FireEye – Advanced Threat Protection
  • Shape Security – Botwall & Polymorphism
  • BioCatch ( IAM) – Biometric Authentication
  • Splunk – SIEM

B2C B2B Cyber Security CDN

Investment in SDN Start-ups is Healthy

Pluribus Networks just landed $50M in Series D, raising its total funding to $92.8M, which helped them leapfrog Cumulus Networks in total funding raised. Pluribus Network is used by CloudFlare in their CDN infrastructure. Going back in time to 2007, Ncira Networks is the start-up that introduced SDN to the world, where they raised $41.8M, and sold to VMWare for an astonishing $1.26B. The list of SDN start-ups below include some of the more well known names, as well as some relatively new ones. One common theme in the SDN start-up world – a big chunk of the start-ups were Co-founded by Stanford PHD’s.

Interesting Nuggets on the SDN Start-up Scene
  • Four SDN Start-ups were founded in 2010, three in 2012, and two in 2013
  • Total funding for all 9 SDN Start-ups is $330.3M
  • 8 of 9 start-ups are based in Silicon Valley
  • Barefoot Networks has Nick McKeown, Stanford Professor as a co-founder, who was also a Co-founder of Ncira Networks
  • Barefoot Networks Principal Software Architect spent 3 years as a member of the Technical Staff at Big Switch Networks
  • Forward Networks has 4 PHD’s from Stanford, and one of the Co-founders was advised by Nick McKeown
  • Versa Networks Co-founder was previously CTO of Juniper Networks
Company  Founded Emp Raised HQ
1 Pluribus Networks 2010 80  $92.8M Palo Alto
2 Big Switch Networks 2010  85  $44.7M  Santa Clara
3 Plexxi 2010  79  $48.4M  Cambridge
4 Cumulus Networks 2010  91  $51M  Mountain View
5 Viptela 2012  51  $33.5M  San Jose
6 Avi Networks 2012  41  $33M  Sunnyvale
7 Versa Networks 2012  53  $14.4M  Santa Clara
8 Barefoot Networks 2013  20  $1.4M  Palo Alto
9 Forward Networks 2013  9  $11.1M  Los Altos

*data collected from crunchbase and employee count from LinkedIn.

Convergence: Akamai, Palo Alto Networks and Fortinet

On February 3, 2014, Palo Alto Network’s stock (PANW) closed at $57.71. Approximately one year later, their stock closed at $126.90, valuing PANW at $10.1B. That is a significant accomplishment. PANW is twice the value of Fortinet, twice the value of FireEye, and in the same ball bark as Akamai. What does PANW, Fortinet and Akamai have in common? They’re in the cloud security business, and those segments are converging, and features sets are now overlapping. The pure-play security segment is one of the best sectors in technology, especially when one correlates annual revenue to market cap, as illustrated below. That is the reason why CDNs are investing heavily in developing their security feature set.

Company Oct-2014 July-2014 Apr 2014 Jan 2014 Mkt Cap
Akamai $498M $476M $453M $435M $10.3B
Palo Alto $192M $178M $150M $141M $10.1B
Fortinet $193M $184M $168M $177M $4.9B

Security Feature Set Comparisons

The diagram below illustrates and compares the features between PANW, Fortinet and the Cyber Security CDN. PANW has made the smart decision to offer its products on a virtualized basis, because low cost high performance bare metal hardware is a more economical alternative, than highly priced proprietary hardware solutions. Incapsula, Distil Networks and Zenedge have decided to cross from the last mile security tier, into other tiers. Its likely that one day Cyber Security CDNs will develop feature sets that enable them to compete head to head with PANW. With $1.6B+ in cash, Akamai is in the best position to do so.

Cyber Security Convergence

Netflix and Amazon vs Network Operators

Network Operators of the world, here comes Netflix and Amazon, to a city near you. For the Network Operator delivering video content in their respective geographies, things just took a turn for the dramatic. Let’s assess the challenges awaiting the Network Operator. Before we start, here is a recap Netflix’s accomplishments over the last four years:

Netflix and Amazon

  • 10K: 2012 revenue = $3.6B, 2013 = $4.4B, and 2014 = $5.5B
  • 10K: “Streaming content rights are generally specific to a geographic region and accordingly our international expansion will require us to obtain additional streaming content to support new international markets”
  • 10K: End of 2014, domestic members numbered 39.1M and international 18.2M: the total # of members is 57.3M
  • 10K: Launched in these countries: Canada, Latin America, UK, Ireland, Finland, Denmark, Sweden, Norway, Netherlands, Germany, Austria, Switzerland, France, Belgium, Luxembourg, Australia, New Zealand
  • Netflix wants to expand from 50 countries to 200
  • Netflix plans on spending $3B on original content
  • Netflix commands 32.39% of upstream and downstream Internet traffic in US, which is 1/3 of all Internet traffic
  • Amazon Studios plans on creating 12 original films per year

Netflix CDN & Amazon CDN 

  • Netflix is an extremely robust, scalable, and feature rich platform, powered by a world class CDN
  • Amazon has a robust OTT platform, powered by a world class CDN

Continue reading Netflix and Amazon vs Network Operators

CDN Ecosystem Updates #5

Amazon

  • AWS now has 1M active accounts
  • Recorded $214M in earnings, exceeding expectations
  • Google and VMWare form partnership, to counter AWS dominance in the cloud sector
  • Invested $1.3B into Prime Instant Video

Palo Alto Networks

  • Market valuation surpassed $10B, making it one of the hottest security stocks in the world
  • PAN is twice the size of FireEye and same size as Akamai
  • The #3 player in security appliances with 7.6% market share, according to IDC
  • Cyber Security CDNs, take heed, if there is any security company to mimic in terms of security functionality, it’s PAN

PeerApp

  • PeerApp made a brilliant decision to branch out into the education sector, where it is gaining traction, winning market share, and best of all, uncovered another large addressable market
  • CIO Review Magazine names PeerApp one of the Top 20 Most Promising tech companies to the educational sector

Yottaa

  • Vick Viren Vaishnavi joins company as CEO
  • Updated its WAF & DSA feature set
  • Company now Level 1 PCI Compliant
  • 138% revenue increase in 2014
  • Average sales price increased 100% year over year
  • New bookings increased 90%
  • Employee headcount will double in 2015
  • New HQ is moving to Waltham, MA

Ghost Vulnerability

  • Vulnerability named Ghost is impacting the majority of Linux distributions. Red Hat, Debian and Ubunto issued fixes
  • Ghost exposes a flaw in the GNU C Library that can trigger local and remote functions, via buffer overflow