Internap, an infrastructure provider publicly traded, has 500 employees and recorded $69M in revenues for the quarter ending Sept 30, 2013. It has been losing money every quarter for the last several quarters. Back in October 2006, they acquired Vital Stream for $217M. Vital Stream was one of the top tier CDNs of that time, alongside Limelight and Akamai. A few years later, it took a “write down” in two transactions valued at $155.3M.
In short, the acquisition was a disaster of major proportions, much greater than Limelight’s acquisition of EyeWonder. It has never recovered from that. After the acquisition had gone through, many Vital Stream employees left the ranks and filled the positions of the next generation CDNs like EdgeCast and Cotendo. The Internap employees took all their CDN knowledge with them and made sure they didn’t repeat the same mistakes they did at Vital Stream.
At that time, the Vital Stream platform was poorly architected, with many glitches, and features that didn’t work. I heard the customer complaints firsthand. But that was okay for 2006, because the CDN market was not as mature as it is now, and a lot of what they were doing was very innovative. Regardless, they grew quickly, and the founders reaped the benefits.
This leads to the question, is Internap even doing CDN these days? I’m sure it is, but on a very small scale. I bet that even smaller overseas CDNs like CDN77.com and MetaCDN are signing up more customers than Internap. CDN is a interesting niche. You can’t really have one foot in CDN and another foot in a different offering like Colo and expect to do well. If pure-play CDNs are having a difficult time signing up new customers in a very competitive CDN market, it’s going to be impossible for a company like Internap to win new accounts.