CDN Nugget #1

Back at HQ, we get a ton of questions from CDNs and start-ups from all parts of the world. Some questions are similar, and others are unique and interesting. We are going to answer those questions in our new series called “CDN Nuggets”. The format is – we ask the question, then answer it. In addition, we’ll pose some interesting questions of our own, and then answer them. The first question we ask is about IBM.

CDN Nugget: What single step can IBM take in order to “Dominate the B2B Content Exchange” niche, hold all large media companies captive, and disrupt a major business segment of Akamai and Level 3″? If IBM acquires Signiant, they would dominate the most important piece of Content Exchange, the High Performance File Transfer segment. IBM currently owns Aspera, and with Signiant in their fold, IBM would own 70% – 90% of the high speed file transfer market. Although the high speed file transfer market is small (less than $75M/annually), it is an extremely critical piece for B2B Content Exchange. All large media companies are using either Aspera or Signiant, including movie studios, distributors, DirecTV, Dish, broadcasters, post production houses, and so on. Once IBM acquires Signiant, they could inevitably pull these two products from the resale market and eliminate the competition, thus forcing the Akamai Content Exchange offering and Level 3 Content Exchange offering to go up in smoke.  

All big media companies around the world use one of these two products. Aspera and Signiant are deeply intertwined into the workflows of film production companies and film distributors all over the world. Who uses Aspera and Signiant? Viacom, DirecTv, ESPN, Disney, Paramount, NBC, CBS, NFL, Deluxe, Technicolor, and thousands more. All these media companies would watch their vendor negotiation leverage vaporize. All other high speed file transfer companies own single digit market share. IBM could easily increase their prices 50%, and Disney, the toughest negotiator in the business, wouldn’t be able to do anything about it. And no, a media company can’t just go out there and make an Aspera. It’s extremely complicated, just like building a CDN would be. Large media companies have spent millions integrating Aspera and Signiant into their video workflows.

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