How much did Microsoft invest in their CDN

It’s interesting that Microsoft ditched its CDN ambitions. Curiosity is now kicking in, how much did Microsoft invest in its CDN platform? Was it $1M, $5M, $10M or tens of millions of dollars? The good news is we are in the infrastructure business, so we are familiar with infrastructure component cost and services. Thus, we can work backwards to get some ideas. In addition, companies wanting to enter this space can use these figures for budgetary purposes. If anyone needs exact pricing down to the penny, reach out to us. Also, keep in mind that although MSFT ditched its CDN, it can still use the infrastructure for the Azure Platform.

The first task is to find out how many PoPs Microsoft has in place. According to MSFT website, they have 29 PoPs:

  • USA (9): Atlanta, Miami, NY, Washington DC, Chicago, Dallas, LA, San Jose and Seattle
  • Europe (11): Copenhagen, Helsinki, Stockholm, Vienna, Warsaw, Amsterdam, Frankfurt, Milan, London, Madrid and Paris
  • Other Regions (9): Batam, Hong Kong, Jakarta, Kaohsiung, Singapore, Melbourne, Sydney, Tokyo and Osaka

With this info, we can start doing some calculations. Based on the estimates below, server pricing is the most significant cost component. Here we go.

Infrastructure Cost

  • Racks: 29 PoPs x 3 Racks x $2,000/month/rack x 12 months = $2M (annual recurring cost)
  • Routers: 29 PoPs x 2 routers (Juniper MX) = 58 routers x $25k = $1.5M (one time cost)
  • Switches: 29 PoPs x 6 switches (Arista) x $20k = $3.5M (one time cost)
  • IP Transit: 29 PoPs x (2x10Gbps) x $2/Mbps = $116,000 x 12 Months = $1.4M (annual recurring cost)
  • Servers: 29 PoPs x 3 Racks x 16 Servers = 1,392 Servers x $21k = $29M
  • Total Annual Recurring Cost: $3.4M
  • One Time Cost: $34M

Footnotes:
  • Server cost is based on 512GB RAM, Dual E5-26xx, Dual Xeon E5-2692, 12TB of SSD, Emulex NIC. Servers price can range from $5k for a low end server, to $25 for a Fastly like server. If MSFT uses HP, IBM or Dell, prices are likely to be higher
  • Bandwidth price is an average. In Europe, bandwidth price with high commits are $1Mbps. In the US, Tier 1 RBOCs are a few $ per Mbps. For Level 3, Mbps is less than $5/Mbps for high commits
  • Rack cost vary per city and country. E.g., Frankfurt and London are expensive compared to the US
  • Switches can be anywhere from $10k for bare metal switches up to $30k for Arista. It all depends on the config and features ordered with it
  • Routers are Junipers MX. Similar Brocade routers are about $14k. Plaribus Networks are lower in cost then either.
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