CDN Roundup: Rackspace, Verizon, CloudFront

It’s been a busy week for the content delivery network (CDN) sector, as Amazon’s launch of its CloudFront has been followed by several significant developments that further expand options for CDN customers:

• Verizon (VZ) announced that it has deployed a dedicated peer-to-peer content delivery network on its infrastructure. Verizon will use technology from Velocix that can cache popular content, and then seeds the files from servers within the ISP’s network, reducing network traffic. Verizon’s approach offers interesting decisions for content providers who are currently using Akamai or Limelight but covet Verizon’s FiOS customer base. See additional coverage and analysis at Contentinople and Telecom Ramblings.
• Rackspace’s Mosso unit has launched its CDN, which allows CloudFiles customers to use Limelight Networks to deliver their files. Gartner’s Lydia Leong compared it with Amazon’s new CloudFront CDN: ”Competitively, it seems like Rackspace’s Cloud Files plus Limelight may turn out to be the stronger offering,” Leong writes. “The price of Rackspace/Limelight is slightly higher, but apparently there’s no origin retrieval charge, and Limelight has a broader footprint and therefore probably better global performance.”
• In that same post, Gartner’s Leong also provided an assessment of the impact of Amazon’s CDN. She writes: “Some people will undoubtedly excitedly hype CloudFront as a game-changer. It’s not. It’s certainly yet another step towards having ubiquitous edge delivery of all popular static content, and the prices are attractive at low to moderate volumes, but high-volume customers can and will get steeper discounts from established players with bigger footprints and a richer feature set. It’s a logical move on Amazon’s part, and a useful product that’s going to find a large audience, but it’s not going to majorly shake up the CDN industry, other than to accelerate the doom of small undifferentiated providers who were already well on their way to rolling into the fiery pit of market irrelevance and insolvency.”      

Roundup: Amazon’s CloudFront CDN

There’s been lots of coverage and analysis of Amazon’s launch of its CloudFront content delivery network (CDN). Here’s a sampling of noteworthy reaction from around the web:   

• Dan Rayburn notes widespread analysis that Amazon’s entry into the CDN market is trouble for Akamai and Limelight. “This assumption could not be further from the truth and people should look at the facts of what the Amazon service is and how that compares to Akamai or Limelight,” Dan writes. ”This is a great service for smaller customers who have very specific needs but it won’t challenge any of the major CDNs for years to come.” Dan notes that Amazon is using Limelight for its own video on demand service.
• How can smaller customers use the service? Amit Agarwal offers an excellent step-by-step guide to implementing CloudFront as a CDN, complete with diagrams.
• Stacey at GigaOm notes that Amazon’s pricing may mean trouble for new CDNs whose selling point has been cheaper rates than Akamai. “With prices ranging from 17 cents per gigabyte for the first 10 terabytes sent out a month, to 9 cents per GB for everything over 150 TB, the service seems to undercut the pricing offered by other CDNs for small to medium sized customers,” she writes.”
• Larry Dignan at ZDNet says that pricing will have an impact. “Amazon is accelerating the commoditization of content delivery services,” Larry writes. “These services are increasingly being bundled into other higher-end offerings anyway.”

Political Sites Scale Up for Election Night Traffic

Election Night is one of the great scheduled scalability challenges. The extraordinary interest in the U.S. Presidential election is likely to translate into enormous web traffic tonight, and news sites and political blogs have had months to prepare. This is the political equivalent of the Super Bowl, and sites are scaling up to meet the challenge. Several hosting companies report increased sales of dedicated servers, and election traffic will likely be a boon to content delivery networks (CDNs).

For some sites, preparing their infrastructure has already been a lengthy process. “I’ve done a lot of stuff since January to get the site ready for Election Day, since we also had primary election traffic to worry about,” said Jeremy Bingham, who manages the back end for Daily Kos, the hugely popular political blog. “Our images are on a CDN, but the rest of the site doesn’t lend itself to caching on a CDN because of its dynamic nature.”

Hardware is part of the solution, Bingham says. “To handle the traffic better, we moved to a cluster of six quad core Xeons with 8GB RAM for webheads that all boot off a central NFS (Network File System) root, with the capability of adding more webheads as needed,” he said. Daily Kos also added two 16GB eight-core Xeons and a 6×73GB RAID-10 array for database files running a MySQL master/slave setup.

Hosting companies have reported increased demand for new hardware in recent weeks. “A few customers have ordered additional servers in order to support the expected increase in traffic over the last few weeks and for the next couple of days,” said George Karidis, CTO of SoftLayer, who said the hosting company has seen an even larger jump in orders for add-on services to help them scale. “In the past few days we have noticed an up-tick in the number of people buying ‘availability’ services like CDNLayer (a content delivery service) and load balancing. Many of these are related to ’spike’ oriented traffic like the election.”

Limelight’s CDN Pricing Gets Disruptive

Dan Rayburn at the Business of Online Video tracks pricing for content delivery services as closely as anyone. When analysts predict CDN pricing wars, Dan is usually the voice of caution, adding balance and context to the conversation. So his post this morning about the recent price cuts by Limelight Networks (LLNW) got my attention.

Limelight has been “getting a lot more aggressive” on pricing for video delivery, and telling customers that the new pricing is driven by recent infrastructure improvements that have lowered Limelight’s delivery costs. Dan had anticipated this would happen eventually, but wasn’t expecting to see it until the second quarter of 2009. He writes:

If they can cut their own costs, pass that savings onto customers in the form of lower pricing and increase their margins all at the same time, we are going to see another huge shift in pricing in this quarter. Not to mention, Limelight is going to continue to grab a lot of the new business in the market and continue their momentum. I am already starting to see some big changes in pricing this month as compared to last quarter and if Limelight continues to put pressure on some of the other providers, we’re going to see CDN pricing for video slashed over the remaining two months of the year.

Limelight’s recent momentum would have seemed unlikely back in February, when the company lost its patent infringement lawsuit with rival Akamai (AKAM). At the time, analysts questioned the company’s ability to continue operating and predicted a sale to a competitor or telco.

Voxel Expands in Equinix Data Centers

Voxel dot Nethas expanded operations in Equinix data centers in Singapore, Amsterdam and Dallas, and now has infrastructure deployed with Equinix (EQIX) in seven different markets. Voxel, which provides managed hosting and content delivery solutions, currently operates within Equinix IBX data centers in Secaucus, NJ, northern Virginia, Chicago and Silicon Valley.

“As we continue to grow our global network and service offerings further into Asia and Europe, Equinix continues to be a valuable partner because they give us the worldwide footprint that is pivotal to our service-oriented mission,” said Zachary Smith, president of Voxel dot Net. “Equinix provides us with the best interconnection and peering solutions needed for delivering massive amounts of rich content in the most reliable manner possible.”

Earlier this year Voxel expanded its content delivery network (CDN) with new installations in data centers operated by Switch & Data (SDXC) in Palo Alto, Calif. and 111 Eighth Avenue in New York. Voxel was founded in 1999 and now has more than 1,000 clients.

Sharp Selloff for Level 3 Shares

Shares of Level 3 (LVLT) plunged nearly 40 percent on concerns about the impact of the  slowing economy on the company’s business. The company’s third-quarter earnings were largely in line with expectations, but Level 3 reported a lengthening sales cycle across several of its businesses, and said that its content markets group “has experienced a decrease in sales to certain media and entertainment companies who may be dependent on external financing sources.” The content markets group includes Level 3’s content distribution network (CDN) business.

Shares of Level 3, which have been battered in recent weeks, lost 49 cents to close at just 75 cents, a decline of 39.4 percent on the session. Rob Powell at Telecom Ramblings has more on the Level 3’s earnings, while Eric Savitz at Barron’s updates the trading action.

Content Delivery Networks Are Hiring

The list of companies laying off staff gets longer every day. But one industry is hiring like mad: content delivery networks. Dan Rayburn at The Business of Online Video lists 23 different CDNs trying to fill more than 200 open positions. Akamai Technologies (AKAM) has 58 job listings, while BitGravity has 25 and  Limelight Networks (LLNW) has 14, If you’re looking for work, check out the list, which has links to each company’s job site.

The data center industry is hiring as well. There are 10 new job listings at our Data Center Jobs Board. If you’re hiring, you can list your company’s job openings there.

Microsoft’s CDN Analysis: Akamai vs. Limelight

Could an additional five data center locations level the playing field between content delivery network (CDN) market leader Akamai Technologies and its leading rival, Limelight Networks? That’s the intriguing question raised by researchers at Microsoft, who have published a detailed analysis of the two companies’ delivery networks (link via Dan Rayburn).

Microsoft found small performance differences between the two CDN providers in North America, but a “big gap in performance” in Europe and Asia, where Akamai has more data centers than Limelight. The researchers identified 27,000 content servers in Akamai’s global network, compared to just 4,100 for Limelight. But the Microsoft researchers suggested that the gap between the two isn’t nearly as vast as those numbers might suggest.

“By learning from Akamai’s existing deployment, a few more data centers can dramatically reduce the delay and make Limelight on par with Akamai,” they wrote. “For instance, 5 more data centers can reduce the delay to about 10% of Akamai and 9 more is enough to match Akamai.”

Limelight Reworks Software for Microsoft CDN

Limelight Networks’ loss to rival Akamai in a patent lawsuit has forced Limelight to rewrite the content delivery network software it licensed to Microsoft Corp. In an SEC filing Friday, Limelight (LLNW) reported that it had amended its agreement with Microsoft (MSFT) to address a February jury verdict in which Limelight was ordered to pay Akami (AKAM) $45 million for infringing its patents. 

Microsoft is building its own content delivery network (CDN), with Limelight providing software and engineering support. The August 2007 agreement between the companies was updated on Oct. 1 to address the Akamai ruling. Here’s an excerpt from the SEC filing: 

Under the Agreement, (Limelight) agreed to license certain software to Microsoft. The Company has been involved in litigation in which a jury verdict has been rendered stating that the Company’s provision of content delivery network services to its customers infringes certain patent claims of Akamai Technologies, Inc. The Company has created or is creating a new version of its software, which the Company believes is or will be non-infringing. The Amendment provides for the implementation of a new version of the Company’s software within Microsoft’s infrastructure.

The brief filing does not indicate whether Limelight has completed the workaround. But it suggests that Microsoft is now satisfied that the software Limelight is providing will no longer infringe Akamai’s patents. If the revised software can support Limelight’s own network - which is not explicitly addressed in the filing - it could reduce the impact of the Akamai patent ruling on Limelight’s ongoing operations.

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.