CDN Fundings May Boost Data Center Demand
The content delivery sector has been busy, and will soon be busier still. Dan Rayburn, who tracks content delivery networks at The Business of Online video, says he is seeing a surge in investment in new competitors in the space:
Hot on the heels of Move Networks raising $34 million at the beginning of this month, more venture capital money will be flowing to other content delivery networks very shortly. Panther Express, EdgeCast and CacheLogic, amongst others, should all announce some pretty large funding deals in this quarter. … Next year, we’re going to have a lot of providers in the market with deep pockets, as is evident by the salaries companies in the CDN space are now paying to attract senior sales people.
Where are these new content delivery providers going to spend that money? A fair chunk of it is likely to be spent on infrastructure. CDNs like Akamai (AKAM) and Limelight Networks (LLNW) are major customers of data center providers, leasing space in multiple locations from peering providers including Equinix (EQIX), Switch and Data (SDXC) and Telehouse. As these new providers get funding to compete in the CDN sector, expect to see demand rise for space to house caching and media delivery servers for content distribution networks.