Limelight Networks has officially launched its edge computing product line. It joins Cloudflare, Fastly, StackPath, and CenturyLink in this new segment. In our industry, edge computing is defined as having the capabilities to ingest, process, store, and deliver data from the PoPs. In doing so, these vendors provide stateless and stateful services to customers, minimizing the need for AWS compute services in certain use cases.
Although edge computing is relatively new, it has the potential to generate a significant amount of revenue for the industry starting in 2020. We believe the revenue generated from these services in the coming years will eclipse the revenue generated for CDN services, at least for some vendors.
CDN is the ideal business model for edge computing. It’s better suited for edge computing than the AWS model for three primary reasons-location, stack efficiency, and performance. When it comes to location, CDNs have always built their infrastructure at strategically located peering exchanges around the world, where all major telcos are present, thus it’s closer to end-users. This is clearly better suited for edge computing than relying on large data centers located in more rural areas.
The second reason is stack performance. The CDN stack is highly efficient. Whereas the major cloud providers offer hundreds of services, many of them unrelated, resulting in a bloated product line, CDN’s offer a few dozen highly specialized services that are fully integrated. And these services tend to reside on each server in the network. This is true for Cloudflare, Fastly, Verizon Media, and others. And last is performance. CDN’s are known to operate highly performant networks that have been optimized for global delivery, thus, they bring a highly performant delivery network to edge computing.
Limelight has gone further than some in discussing their long term business strategy. Last week during Analyst Day, Limelight executives presented an in-depth go-to-market strategy, which included a discussion on their edge computing efforts. The roadmap includes serverless functions, as well as other capabilities that allow customers to build edge applications and place workloads at the edge. In general, edge computing capabilities include everything from serverless functions to FaaS to KaaS to the support of containers in the PoPs and everything in between.
Some interesting highlights from Analyst Day and their more recent 10Q are listed below. Some financial analysts believe Limelight will reach $200M in revenue this year. As of 6/30/19, Limelight had 621 customers. Thus, if we divide the annual revenue by the number of customers, the average enterprise customer spend is 3x higher than Fastly. Based on this metric, Limelight is a provider of the large enterprise as is Akamai. Limelight’s customers include Disney, Starz, Amazon, HBO, and other large brands. The question going forward, can Limelight reach $500M in the next 3-5 years? With a robust edge computing portfolio, the chances of doing so improve.
Analyst Day Notes
- Got-to-market presentation
- Growth areas: gaming, gambling, medical care, autonomous vehicles, agri-tech, military and defense, virtual tourism
- Maintain belief in growing 15% y-o-y
- with 8%-9% from the current customer base
- rest from new services
- End year with 50-55 Tbps of network capacity
- Hired Tom Marth as SVP Sales and mike Palackdharry as SVP Strategic Solutions
- Started edge compute infrastructure build-out in 2019 and continue for next couple of years
- Serverless and real-time application suite coming out
10Q Ended 6/30/19
- 621 customers
- Top 20 customers represented 68% of total revenue
- Amazon represented 10% of total revenue
- Revenue per region: Americas-61% and EMEA-16% and APAC-23%
- CDN, video streaming, cloud security (DDoS protection, bot mitigation, and WAF), private network, and edge computing
- HBO, BBC, Amazon Prime Video, DirecTV, ABC, MLB, ABC, MSNBC, ESPN, Disney, BT, Sky, Comcast…