Last year, Akamai generated $1.5B in annual revenue. This year, if Akamai grows as fast as they did in the 1st quarter of 2014, they are likely to reach $2B in annual revenue. In 2014, the number #2 CDN is on track to generate between $150M to $250M. Thus, the delta between Akamai and the #2 CDN is about $1.75B in annual revenue. Instead of trying to figure out who is the #2 CDN by revenue, it’s a safe bet to say that a group of CDNs are all pretty much in the same ball park.
We’ll just call this group the #2 CDN Club. The #2 CDN Club consist of the following CDNs: EdgeCast, Level 3, Amazon Cloudfont and Limelight. We don’t include Microsoft Azure CDN in the #2 CDN Club, since they are likely generating less than $100M in CDN sales annually. And we only count CDN related revenue, not cloud storage, cloud compute, and other non-CDN services. Who in the CDN Club has the best shot at reaching $500M in annual revenue?
According to some estimates, EdgeCast generated around $100M in annual revenue last year. In 2014, that amount is likely to reach $140M to $200M. In 2015, if Verizon plays their cards right, its possible they reach $300M to $400M in annual CDN sales. In 2016, EdgeCast may reach $500M in annual revenue. How is that possible? The potential is there, as Verizon has every single Fortune 1000 as a customer, plus all the largest banks, hospitals, and the list goes on. Currently, EdgeCast is slowly being integrated into Verizon Digital Media Services (VDMS). We say slowly because Verizon is one of the two largest Telco’s in the US, and Telco’s aren’t necessarily known for moving at breakneck speed. But the bigger potential for Verizon is in their enterprise sales organization that sells to traditional businesses.
What Verizon must do to dramatically increase their annual CDN sales is to create a product for the traditional enterprise sales force. That means CDN services are to be offered alongside SIP, MPLS, Colo, Private Lines, Manage Services, Cloud, and so on. Verizon has thousands of enterprise sales employees all over the country and world. The formula is to create a CDN organization similar to Level 3. The most critical piece of that organization would be the CDN Overlay team that support the sales force. Can Verizon be successful in accomplishing this challenging feat? Yes, Verizon can be successful just like Level 3. However, a few miracles must happen here and there, since it’s well known in the industry that Verizon is giving all the love to its wireless unit, and not necessarily its core network and infrastructure businesses.