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presented its state of the union during the investor summit earlier today. As always, the metrics presented are fascinating and important because they give us an in-depth pulse on the Internet and their business model. One of the most interesting parts is the case study on a Top 10 Bank. Based on the slide deck, Akamai charged this specific bank the following prices: $3,500/mo. for a Cloudet, $31,000/mo for Prolexic (initial) and $17,500 for Bot Manager (1 site). Read MoreAkamai
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We’re excited to announce that we’ve just created a 2nd product called Research, which are in-depth premium reports. Those interested in premium research can access our data via a monthly subscription or individual long-form reports. The first premium report we’re offering is the EC-CDN (Edge Compute) Blueprint. The report contains 15+ pages, 4k+ words, 7 diagrams, 1 chart and 21 citations. The report analyzes the role that edge compute will play in the CDN market. It is a little more technical in nature, that discusses distributed storage, distributed compute, replication, and more. Check out the details here.
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Nikolai Nikiforov, Russia’s Minister for Communications, recently announced plans to launch a new mobile operating system across all the BRICS nations (Brazil, Russia, India, China and South Africa) that will challenge the dominance of the US developed Android and iOS. The Russian minister met with Finish developer Jolla to talk about creating a new mobile operating system based on Jolla’s open-source Sailfish OS. His long term ambitions include expanding Sailfish into an entirely international effort. The minister would like employees from IT companies in the BRICS nation to give 20% of their time to work on pan-BRICS initiatives like the new operating system. Nikiforov told Russian newspaper RBC that across the next decade, he would like the use of non-Russian mobile operating systems to fall to only 50% of market share. According to Gartner analysts, Android currently makes up 81% of Russia’s OS market share and iOS holds 15%. Saltfish OS currently holds only 0.5% of the market, below Blackberry and Windows Mobile. However, combine its lack of ties with the US with its open-source operating system that allows anyone to use it as the foundation of their own software, and Saltfish look likely to prove a strong nominee for a future Russian open system. Read More
The Internet has been torn asunder at the news of Verizon buying AOL. The PR machines are on overdrive trying to figure out the reason “why Verizon acquired AOL”. There are dozens of theories on “why the acquisition” and most of them talk about mobile videos, ad revenue, advertising technology, and so on. However, the first thing we need to do is to “get out of the ad network mindset, and into the phone company mindset”. Verizon is the typical everyday regulated phone company that sells pots lines, Internet access, GPON, toll free numbers, wireless, etc. If we look at things that have been happening in the wireline and wireless business, we’ll find out answer.
For the last few decades, Verizon was a powerhouse in the wireline business. Today, the wireline business has become a commodity business, hence the reason Verizon selling a big chunk of their wireline and cell tower business for $15.6B to Frontier and American Towers. In another time zone, AT&T acquired some phone companies in Mexico, and their goal is to become the #1 carrier in Mexico in the next decade, bumping aside Carlos Slim’s America Movil. Verizon and AT&T are making these moves for no other reason to counter GAFAN. Verizon and AT&T are regulated phone companies that are under tremendous pressure in the US market. There aren’t too many other markets to expand into, except expanding vertically and across Mexico.
Akamai and Amazon are similar in a few ways. Akamai dominates the CDN industry with about 53% market share. Amazon Web Services dominates the cloud industry with 30% market share. Each has three fierce competitors. Also, Akamai has a CDN that is orders of magnitude better than Amazon CloudFront, but Amazon has the leading cloud platform and Akamai has none.
Akamai vs Amazon Web Services
- Akamai: 53% CDN Market Share. $2B Annual Revenue. Main Competitors are Level 3, EdgeCast and Limelight Networks
- AWS: 30% Market Share. $5B Annual Revenue. Main competitors are Google Cloud, Azure and IBM SoftLayer
The CDN Ecosystem continues to flourish, as new players enter the industry with unique features and business models. The latest trio of entrants are the RAN based CDN innovators. They include Rev Software, Twin Prime and Kwicr. Rev Software has a full scale CDN, and Twin Prime + Kwicr optimize the delivery of content in the RAN last mile. The key feature of the RAN based CDN is their SDK mobile app. The SDK is an easy-to-install software program that CDN enables the mobile devices, making it easier for the mobile device to communicate with the CDN PoP. The timing for the RAN CDN is perfect, as the next generation of 4G, WiFi, and IoT takes off. All signs are pointing to the fact that the next five years may possibly be the best period in CDN growth ever. Why? Because there will be 5B+ mobile devices in five years, and IoT will be mainstream.
- RAN CDNs: RAN based CDNs offer wireless last mile solutions in the RAN
- Octoshape: No longer listed, since they’ve been acquired by Akamai
- Big 4 CDNs: Infrastructure heavy global CDNs; each has 10,000 servers plus in deployment and push Tbps of sustained bandwidth
Dynamic Site Acceleration, Application Delivery Network, Front-End Optimization, and Mobile Content Optimization are some of the bread-and-butter protocol optimization services offered by most CDNs. Some are free, and others are available for a hefty price. Over the last decade, CDNs have employed tricks of the trade and made these optimizations a part of their feature set, with the intent of improving page load times. Some of the well known optimizations include domain sharding, keep alive, persistent connections, multiplexing, parallelization, connection pooling, compression, window scaling, and so on. However, CDNs must now consider that sooner or later, Google might take those awesome tricks, and make them a part of their infrastructure. And once that happens, if the optimizations are good enough, Google might push them to become part of a standard.
Google’s innovation in protocol optimization is chipping away at the CDN feature-set. Yes, the Internet is better off as a whole, but the CDN revenue associated with these optimizations will vanish over time. Google’s PageSpeed, SPDY, HTTP/2, and now the UDP-based QUIC are amazing in that they are embedded into HTTP protocol. Although its still early in their life cycle, over time they will mature, and grow in functionality. Google is taking control of these optimizations away from CDNs: multiplexing, compression, persistent connections, and encrypted connections and making it an everyday thing, available to the public free of charge. Conclusion: Google is more interested in content delivery than anytime in the past. Therefore, CDNs must be on high alert, because a killer CDN feature dependent on a protocol optimization, including those in the RAN, might one day become a basic part of an Internet standard, courtesy of Google.
Zscaler is on fire right now. They have 13M users from a base of 5k companies, doubled their bookings in Q1 2015 over last year, and recently closed a $10M deal with a Global 100 consumer goods company, which sounds like Nestle or Unilever, through a partnership with BT. Zscaler is also innovation driven, having recently introduced a cloud based WAF, which is similar to the Incapsula's of the world. Indeed, Zscaler is a very interesting start-up that takes the form of many different companies. In some respects, they're like a FireEye, Incapsula, F5, and Aryaka Networks. Although they're not a CDN, they employ CDN like infrastructure with hundred plus PoPs all over the world. In terms of revenue, if we take their 13M users x $1/user - $10/user selling price, that equates to $13M/month - $130M/month. That number seems a bit high. Regardless, if Zscaler is generating $10M/month, that's still an impressive number, and major accomplishment for a start-up.Zscaler doesn't offer traditional caching services and middle mile content acceleration, as Akamai would. With that being said, Zscaler also resembles the traditional carrier. CenturyLink, Level 3, and a handful of US carriers offer Zscaler like services, which include a WAF, DLP, Antivirus, Malware Protection, APT, and configuration / reporting via a dashboard. The carriers use 3rd party products like Fortinet, Symantec, Cisco, Imperva, and so on. Some carriers had to develop this type of offering, in order to serve certain government customers. And when it comes to the delivery of the security service, some carriers provide it via an MPLS port that extends to branch locations. One port offers MPLS, voice, data, Internet Access, and security in an any-to-any topology. Read More
The CDN industry is growing at a healthy clip, and many CDNs are experiencing excellent revenue growth. Akamai recorded 24% growth year-over-year in 2014, and start-ups like Yottaa, Instart Logic, and LeaseWeb CDN continue to delivery triple digit growth. Akamai has 30+ competitors globally, including pure-plays CDNs, hybrid CDNs, and non-CDNs, yet they exceed growth expectations quarter after quarter. Akamai is the barometer of the industry, and as long as they continue grow, so does the overall sector. How long will the CDN sector continue to grow? Or better yet, how many CDNs can the market support before it starts bottom out, perhaps leading to consolidation or asset sales? Based on the current trends, we don’t see widespread market consolidation in the next five years.
Presently, there are many positive trends occurring, and emerging that will increase the need for the CDN. The first trend is the recent rise of cyber attacks. The biggest beneficiaries of the skyrocketing DDoS attacks are CDNs. Thanks to DDoS attacks, CDNs now have a new revenue stream that was non-existent a few years back. At one time, DDoS Mitigation was the domain of the Neustars of the world, but not anymore. Another trend is the IoT. In the next few years, the explosion of Internet of Things with its trillion+ devices connecting to the Internet is likely to create another big revenue opportunity for CDNs. Lastly, in the next few years, ultra HD video streaming, online virtual reality, and next-gen online gaming is going to push data transfer rates that blow past Cisco estimates, as the next iterations of GPON, WiFi, and 4G/5G technologies push the boundaries of the imagination.
Content Delivery Infrastructure Market