Microsoft Bows Out of the CDN Biz. Ripple effects on Apple and Fastly

It looks like Microsoft has in thrown the towel to build out its CDN, and will instead rely on 3rd party CDNs like Verizon Edgecast for content delivery. However, this move is likely to impact Apple more than it will Microsoft or Verizon. We’ll go more in detail below. For now, let’s add some color to the situation, and put it into perspective. Microsoft as a whole, is a big customer of Level 3 and Akamai, and the Verizon EdgeCast partnership is unlikely to change that. There are two sides of Microsoft, the Azure part, and the non-Azure (Windows, Office, Xbox, etc) part, so this partnership only effects the Azure side. All in all, Microsoft as a whole is too massive for any one CDN to handle, with the exception of Akamai.

Microsoft, Google and Amazon (Big Three) are already big customers of Verizon, AT&T and Level 3, on the data/voice side. The Big Three buy tens of millions of dollars (maybe even hundreds of millions) annually in services from AT&T and Verizon, because these carriers are the largest RBOCs (last mile providers & incumbents) in the US that control large swaths of the country, in dozens of states (regions), which are referred to as in-region. Now if we take into account the incremental difference in spend before and after Verizon EdgeCast, it is likely to be minor.

With Microsoft throwing in the towel, Apple is going to have to think long and hard on the Microsoft scenario, and calculate if its worth going through all the hassle to build a CDN, only later to abandon it. Apple just launched their CDN a while back, and the learning curve for running a stable CDN platform is 3 to 5 years. Apple is using Apache TS, and buying transit and colo from Tier 1 Service Providers. The question is will Apple continue to spend millions of dollars over the years building its own CDN, only later to throw in the towel. That’s a possibility. The other choice is to buy a CDN. If they decide to buy a CDN, Fastly is the best fit out of all 46 CDNs in the ecosystem. Fastly is a next generation general purpose CDN that does almost everything, including small file delivery, wireless last mile content CDN delivery, live streaming, VOD, etc.

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