Bloodbath Coming To The CDN Industry

It should come as no surprise that 2017 is going to be “The Year of The Bloodbath” for the CDN industry. Many pure-plays will exit the industry, most by acquisition or merger. The writing is on the wall for CDNs providing basic caching and streaming services. What is basic caching + streaming services? Caching + FEO + DSA + VOD Delivery + Live Streaming. For the CDNs barely getting into the Edge Security business of  WAF + DDoS Mitigation, it’s too late to make a difference, unless it’s done via acquisition. There are just too many players out there in the market.

Akamai is no longer the 800lb gorilla of the CDN industry. The new 800lbs gorilla is the Cloud Trio of Amazon + Azure + Google. Google acquiring Anvato was the nail in the coffin for the CDN commodity business, especially video streaming. And not only is the Cloud Trio ramping up their CDN offerings, but also their edge security business. Azure is rolling out PoPs like mad and increasing thier security, plus forming partnerships with the likes of Qualys. AWS is on a WAF innovation rampage and it will only be a matter of time before they match the CDN WAF in functionality.

I don’t like to name names out in the public, only behind the subscription paywall, but I’ll do it this time only.

  • Level 3 will have to exit the CDN business because their core offering is video streaming, and the Cloud Trio is going to come in and steal away that business. Streaming is a commodity business and he who has the optimal economies of scale wins. And Level 3 is no match for the Cloud Trio from a cost per unit perspective
  • Highwinds is in trouble. Their feature set is limited and the Cloud Trio will  pounce on their business
  • Akamai’s video business is huge and a part of that business will be under threat from the Cloud Trio. However, fortunately for Akamai, they have economies of scale

In other words, the Cloud Trio is going to devastate the CDN industry and gobble up the low hanging fruit. It’s no secret that the Cloud Trio is hungry for new business, giving away cloud products to newcomers.

To make matters more interesting, “The Platforms” such as Varnish + Nginx + Wowza + Vimeo’s of the world are a threat to CDNs because whether you agree or not, they’re in the CDN business. If you’re a CDN startup with the basic caching and streaming services, its time to go back to the product management whiteboard and come up with some killer innovations that knocks the socks off the industry. Aryaka Networks, PerimeterX and Cato Networks should be patting themselves on the back at this moment for being different.

Commodity vs Innovation

Writing-On-The-Wall

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