Akamai Price Cuts: Bad News for CDN Rivals

For years, Akamai Technologies (AKAM) was the market share leader in the content delivery sector, and had a pricing premium built into many of its services. For many rivals, a key marketing pitch was being cheaper than Akamai. When the market was flooded with VC-backed startups, it was assumed that competition would eventually force Akamai to alter its pricing.

Those predictions went unfulfilled for several years. But the game has changed in recent months, according to Dan Rayburn, who tracks CDN pricing trends closely through regular market surveys.

“Over the past four weeks I have seen bids where Akamai has matched pricing from Limelight, Level 3 and EdgeCast or in some cases, undercut their pricing all together,” Dan writes at The Business of Online Video. “I have seen fewer video contracts steer away from Akamai in December and January and it’s clear the company is taking a serious pricing reduction strategy and applying it to a wide portion of their video business.”

Roundup: VMware, Akamai, Peak10, Raritan

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

VMware to Acquire Zimbra. Virtualization leader VMware announced a definitive agreement to acquire Zimbra, a leading vendor of email and collaboration software, from Yahoo Inc.  With over 55 million mailboxes, Zimbra products offer a full enterprise feature set to small and large environments, with on-premise or hosted service options.  “Over the coming years, we expect more organizations, especially small and medium size businesses, to increasingly buy core IT solutions that deliver cloud-like simplicity in end-user and operational experience,” said Brian Byun, Vice President and General Manager, Cloud Services, VMware. Under terms of the agreement Yahoo! can continue to use Zimbra technology in services, but VMware will purchase the technology and intellectual property.  Yahoo acquired Zimbra for $350 million in 2007.  The acquisition is expected to close in the first calendar quarter of 2010.  Financial details were not disclosed.

Akamai Implementation for Autotrader.com. Akamai Technologies announced that AutoTrader.com has implemented a number of Akamai services to support the growth of its online business.  Akamai said its Dynamic Site Accelerator and Web Application Accelerator have shown a 2X improvement in performance, enabling the site to load twice as fast as before and data center traffic offload exceeding 80 percent.  Mark Tuttle, Senior Manager of Engineering at AutoTrader.com said “having Akamai in place enables us to provide valuable information to our consumer quickly and reliably, without worrying about whether our infrastructure could scale to cope with the increasing user demands.”

Roundup: SGI, Akamai, Data Centers Canada

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

• SGI extends support to Verari customers. Capitalizing on the recent troubles at Verari, SGI (SGI) announced Monday that they will provide customized support for Verari Systems customers on a global basis, beginning immediately.  “In an effort to provide Verari customers confidence in their business continuity and an ability to map their technology futures, SGI is now adding Verari Systems to our multi-vendor service offerings for both Customer Service and Professional Service,” said David Yoffie, senior vice president of services at SGI.
• Akamai Introduces Cloud Firewall Service. On Monday Akamai Technologies (AKAM) expanded their cloud-based suite of security capabilities with the introduction of its Web Application Firewall managed service.  The new service is based on the open source ModSecurity Core Rule Set supported by Breach Security.  Akamai customers can subscribe to the firewall service to protect their web applications and easily manage their own security rule set through a customer portal.  “Cloud-based security offers an innovative approach to helping organizations overcome the limitations of traditional perimeter solutions by adding a globally-distributed layer to their defenses,” said Tom Leighton, co-founder and chief scientist at Akamai.
• Data Centers Canada adds Internap. Canadian data center servcies company Data Centers Canada announced Wednesday that they have added Internap (INAP) service to their Toronto North facility in Vaughan, Ontario Canada. “Bringing together the capabilities of Internap and Data Centers Canada creates a powerful package of high-performance data center and Internet routing for Canadian customers,” said Peter Evans, senior vice president of marketing at Internap. The Toronto North facility was expanded in October 2009 and provides colocation and disaster recovery services.

Roundup: Level 3, Akamai, Liebert

Here’s a roundup of news announcements from the data center and hosting industry:

• Akamai Reports Third Quarter 2009 Results. Wednesday Akamai released financial results for the period ending September 30, 2009.  Revenue was up 5% year over year at $206.5 million and cash flow from operations up 13% year over year at $105.2 million. “Our results demonstrated our ability to leverage the Company’s unique cost structure and scale while improving performance and reliability for our enterprise-class customers,” said CEO Paul Sagan. During the third quarter the company repurchased approximately 2 million shares of common stock for $36.2 million at an average price of $18.41 per share.  Customers with recurring contracts at the end of the third quarter increased to a record 3,031; an 8% increase year over year.  It was also reported that Akamai is conducting an internal probe on insider trading after an unnamed executive was implicated in a massive insider trading scandal.  No Akamai official has yet been named or charged in the case.
• New Next Generation Data Wales facility. European data center specialist Next Generation Data announced the opening of a $326 million data center in Wales, U.K. Known as NGD Europe, it is the largest of its kind in the U.K. and one of the largest in Europe. The 700,000 square foot space was formerly a semiconductor plant and can be divided into multiple areas for individual clients. Several blue-chip companies have signed long-term contracts and Next Generation Data is offering a range of wholesale space-only contracts to large companies. NGD Europe has numerous security features, such as prison grade perimeter fencing, biometric recognition and ex-special forces security guards, bomb-proof glass and triple-skinned walls.

Roundup: Akamai’s New HD Video Network

Content delivery market leader Akamai Technologies (AKAM) generated lots of buzz in the CDN sector last week when it scheduled a media event to announce “a new strategic company direction for video delivery.” Yesterday the company unveiled the Akamai HD Network, a platform to deliver high-definition online video using Adobe Flash technology, Microsoft Silverlight and the iPhone. “The Akamai HD Network is the only solution that supports live and on-demand HD streaming with a highly-personalized and interactive online experience that matches and complements HD television,” the company said. Did the announcement live up the anticipation? Here’s a roundup of notable commentary and analysis:

• Dan Rayburn at The Business of Online Video says the new technology doesn’t address Akamai’s broader business challenges. “If Akamai does not lower their pricing for this new platform, it won’t do anything to help their business grow,” Dan wrote in his initial reaction. “Watching video in HD quality is nice, but most content owners are not putting their content in HD today due to the added cost, not because of any technology limitation.” He followed that up with a longer, sharply critical commentary of Akamai’s current strategy.
• Ryan Lawler at Contentinople drills down on technical issues surrounding Akamai’s plan for http-based streaming. “Not all of the protocols named actually support HTTP streaming right now,” Ryan writes. “While Silverlight and the iPhone both use HTTP streaming, the most recent version of Adobe’s Flash Media Server (FMS), version 3.5, does not.
• Rob Powell at Telecom Ramblings says Akamai’s new offering “raises the stakes for smaller CDNs still looking for scale and profits, and it emphasizes the never-ending treadmill of upgrades and new platforms they may need to keep up with to stay in the game.” But he also wonders whether Akamai’s tease oversold the announcement. “I guess I was expecting a ‘new strategic direction’ to be a bit more – shall we say – dramatic? It’s not as if we haven’t been watching video roll onto the internet steadily and mercilessly for some time.”

Roundup: NASA, PG&E, Limelight, Akamai

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

• NASA to spend over $4 Billion on IT Services. Federal Computer Week reports that NASA is planning on opening for competition a series of IT services contracts worth an estimated $4.28 billion.  Some Request For Proposals (RFPs) could be out as soon as September 22 for the agency-wide Information Technology Infrastructure Integration Program at NASA.     Included in the consolidation project is a contract for data center operations, facility management and hosting services for NASA’s Enterprise Data Center (NEDC).  This contract could be worth $1.5 billion over five years and is due to be awarded in May 2010.
• PG&E starts rebates for data storage. Pacific Gas & Electric has added thin provisioning and MAID data storage systems to the data center technologies it will pay people to install. According to the GreenTech Media article data centers in northern California use up about 2.5% of the power, compared to about 1.5% nationwide. Beyond looking at other storage technologies for possible rebates, PG&E is looking at developing incentives for thermal energy storage.

Getting Faster: SGI, IBM, Pliant SSDs, Akamai

Here’s a roundup of some of some of this week’s headlines on benchmarks, speed records, and response times:

• IBM breaks processing speed record. IBM announced Monday that the company set a new technology benchmark for the financial services industry, delivering the fastest recorded throughput performance and lowest network latency on Reuters Market Data System v6.0 (RMDS). Using the IBM BladeCenter HS22 server they processed 1.3 million market data updates per second, while maintaining a latency of less than 1 millisecond. Alex Yost, vice president IBM Systems and Technology Group said “The new generation of System x and BladeCenter solutions redefine how x86 clients can address today’s challenges with servers that have less than half the power consumption, one-third the management cost, and more than twice the performance.”
• SSD startup offers more than twice the input/output. Startup Solid State Drive (SSD) company Pliant Technologies announced Monday an enterprise flash drive (EFD) family, a new class of high-performance, high reliability storage drives.  The EFD’s deliver 2 -4 times faster input/output operations per second and 10 times higher data reliability than existing SSD’s.  The Pliant Lighting EFDs are the first flash-based storage devices to feature a cache-less design to prevent data loss on power interuptions, and a number of advanced data reliability features to deliver complete end-to-end data protection.  The Lightning EFDs have been specificaly designed for demanding, mission-critical 24×7 applications.   The products are being delivered for OEM evaluation and qualification and will be available in September 2009.

Apple Data Center May Reduce Use of CDNs

One more item on the potential implications of Apple’s new data center in North Carolina. Dan Rayburn has an important post on how Apple’s data center buildout may affect its extensive use of content delivery networks Akamai Technologies (AKAM) and Limelight Networks (LLNW).

“Folks I have spoken to inside Apple told me that once the new data center is completed, Apple plans to have a more active role in doing their own content delivery,” Dan writes. “While this won’t be happening anytime soon, since the data center won’t even be completed this year, it does indicate that over time, third party CDNs like Akamai and Limelight could very well lose a large portion of Apple’s business. While it’s way to early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we’ve seen Microsoft do over the years.”

Roundup: Energy-Aware Routing, Savvis, XO, Juniper

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

• Energy-Aware Internet Routing. An energy reduction of as much as 40% could be seen by rerouting data to locations where electricity prices are lowest on a particular day.  This was according to a study from MIT, Carnegie Mellon University, and Akamai.  MIT PhD student Asfandyar Qureshi first outlined the idea of a smart routing algorithm in October 2008 and he then approached researchers at Akamai to obtain the real-world routing data needed to test the idea.  ”The researchers first analyzed 39 months of electricity price data collected for 29 major US cities. The team then devised a routing scheme to take advantage of daily and hourly fluctuations in electricity costs across the country”.  Lawrence Berkeley National Laboratory staff scientist Jonathan Koomey said “the trick is to be able to control these systems well enough to create controls that are cheap enough to be able to take advantage of the arbitrage opportunity available from different electricity prices, without effecting reliability or latency.”  The research paper, to be presented at SIGCOMM 2009 can be found here.
• Tradebeam selects Savvis to support IT infrastructure. Savvis announced Monday an agreement to provide hosting services to TradeBeam, a software-as-a-service provider for global trade management (GTM).  TradeBeam’s solutions facilitate billions of dollars of global trade.  TradeBeam Vice President of IT said “Savvis is an industry leader offering a global footprint of high performance SAS 70 certified data centers integrated with one of the world’s largest Tier 1 networks”.
• XO Communications embarks on third nationwide network capacity upgrade. The XO inter-city transport network will more than double in capacity with the latest upgrade, to be completed later this year.  XO Communications again chose Infinera products to deploy the ultra-long-haul network, this time using Infinera’s ILS2 line and delivering 160 wavelengths on a single fiber.  The 1.6 Terabits/second optical capacity will service carriers, service providers and enterprise customers as well as XO’s Carrier Services network transport offerings.  The current Infinera DTN system is the only DWDM system with 160 wavelengths in the C-band and is scalable to 8 Tb/s in the future.