CDN Consolidation Could Be ‘Imminent’

Industry analysts who track the content delivery sector have been warning for months that the explosion of new companies in the sector would inevitably result in a consolidation. In May the list of CDN providers reached 50 companies, and Dan Rayburn predicted a shakeout would occur in the next 18 months.

It appears we won’t have to wait nearly that long. Ryan Lawler of Contentinople reports from Streaming Media West show that that deal rumors are flying:

There was clear talk of term sheets being passed about, which led one CDN exec at the show to quip, “Half the companies here are shopping themselves.” Another said that strategic talks between attendees dramatically could change the face of the conference in the next 12 months. “The big question, if you look around the room, is how many of these companies will be here next year,” he said.

But who will the buyers be? Market leader Akamai (AKAM) has often bought smaller rivals with promising technologies, and there’s been steady speculation that major telcos would buy up CDN providers.

What’s driving the sudden deal frenzy? One factor could be Amazon’s recent decision to launch its own CDN. As we noted at the time, Amazon’s entry into the CDN market is problematic for the newer players, and especially so for those positioned as a cheaper alternative to Akamai.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. What is the role of these ~50 CDN companies in a cloudy world? Given today's availability of datacenter facilities around the world, their high level of network connectivity, and the increasing speed of Internet backbones, perhaps the CDN business as we've known it is becoming an anachronism. Publishing content into the Cloud will evolve to be more effective than buying CDN capacity.