Toppling the content kings

Ditlev Bredahl is on a mission to bring content delivery network (CDN) services to the masses. The CEO of cloud hosting software company OnApp believes that the CDN market – which offers services to boost website performance – has for too long been dominated by a small cabal of “cocky” providers charging “crazy” prices.

He may have a point: CDN services from specialist, market-leading providers such as Akamai, Limelight Networks and CDNetworks are costly. But for companies that do significant business online, especially those that target international audiences, these services are an unavoidable cost.

At their most basic, CDN services take customers’ frequently accessed web content (for example, picture files, video clips or downloadable PDFs) and place them on the provider’s own high-speed servers, scattered around the world. Done well, higher-bandwidth content is moved onto servers that are closer to customers, delivering a hefty performance boost.

A good CDN service also provides protection for a website operator’s own infrastructure, wherever its customers are based. Take, for example, online property company Rightmove. When head of service delivery Luke West joined the company in 2007, Rightmove’s web servers were delivering between 10 million and 11 million pages per day, each offering numerous photos of available properties. Today, he says, that figure is closer to 35 million per day.

Rightmove could, in theory, use its own image servers to deliver the photos, but that option would place those servers under huge pressure. The bandwidth investment alone would be substantial, says West.

Instead, Rightmove uses CDNetworks as a ‘shield’, he says. CDNetworks’ servers deliver Rightmove image files from a pre-populated cache on its own high-speed machines, so that eager house-hunters aren’t kept waiting to view photography of available properties.

If a particular image has yet to be added to the CDNetworks cache, a one-off request for that photograph passes from CDNetworks to Rightmove, and it is then added to the cache to fulfil the request. “That protects our image servers from multiple calls for the same picture,” explains West.

Each month, CDNetworks handles around 160 terabytes of image data on Rightmove’s behalf. To put that in perspective, it’s enough to fill 36,000 standard 4.5 gigabyte disks.

Rightmove is very happy with the service it receives from CDNetworks. Luke West has tried other CDN services and found them to be either more expensive or slower, or both. An important element for him, he says, is the responsiveness of the provider’s team. “They need to be people you can do business with, who get things sorted when you’ve got problems,” he says.

Offsetting capital costs

According to OnApp’s Bredahl, all is not well with the CDN model. He says that while this kind of service is not that complex to provide, it is hugely capital-intensive for the CDN providers, requiring them to own and maintain substantial server assets in multiple locations worldwide.

This means that they need to lock customers into long-term contracts. Customers are typically expected to sign up for a contract of at least one year – longer if they have haggled down the price. “This is not an opportunity for month-to-month, cloud-based tariffs,” Jeff Kim, CDNetworks’ chief operating officer for the US and EMEA, told Information Age.

Some companies, such as Rightmove, are happy to pay a premium and make a long-term commitment in return for the best possible service. For others, this is not an option.

In August 2011, OnApp unveiled what Bredahl claims is a cheaper, easier way for web hosting providers to offer CDN services to small and medium-sized companies. OnApp’s new CDN software – acquired in the company’s purchase this summer of Aflexi – enables hosting providers to create local CDN ‘points of presence’, or PoPs, on their own servers. At the same time, they become part of a wider federation of other hosting providers worldwide, all running the same software, where members can buy and sell spare CDN capacity on demand.

Meanwhile, a software-as-a-service offering hosted by OnApp – CDNaaS (CDN as a service) – determines which local servers in that federation are best suited to deliver content to end-users, based on the status of those servers and their location.

That may sound like a hassle for hosting providers, but it’s a chance to offer CDN services to customers who need them but can’t afford to buy from established providers and, at the same time, make money out of their spare hosting capacity, Bredahl says.

For end-user organisations, it is a chance to get rapid delivery of web content from hosting providers that they already do business with, “who understand their business and their current website set-up, and who can provide support as part of their existing relationship”.

One hosting provider that has signed up to OnApp’s systems is PEER 1 Hosting. “We haven’t launched our CDN service yet, but we’re seeing a lot of demand and expect very good take-up,” says Dominic Monkhouse, EMEA managing director of PEER 1. “Any company that cares about its visitors’ user experience needs CDN.”

Next >> Turmoil in the CDN market

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OnApp and its hosting-provider customers are hoping to disrupt a market that is already in turmoil.  

Ten years ago, the landscape was so much simpler. There was effectively only one player in this market, namely Akamai. This is the company that essentially founded and defined the market, scooped up would-be rivals such as Speedera and Netli along the way, and to this day remains the clear market-share leader. High-end customers are well prepared to pay for a high-end service, says Alex Gibbons, Akamai’s president for Northern Europe. “There’s a general fascination with price in this market among market commentators,” he says. “It’s fair to say that we are not the cheapest, but we never set out to be. We’re fulfilling a need in the market among companies that are not prepared to trade price for quality.”

In other words, Akamai is the Rolls-Royce of CDN, with Rolls-Royce prices. In a mid-2010 assessment of the market, Gartner’s Lydia Leong found that Akamai customers typically paid around $10,000 per month for its services. Entry prices, she found, rarely sank beneath $6,000. “In competitive situations, [Akamai] is typically 10% to 30% more expensive, and without a competitive bid the prices can be even higher,” she wrote.

In recent years, Akamai has found itself under increasing pressure from new entrants such as Limelight Networks and CDNetworks – companies that are able to compete fiercely not only on price but also performance. Shares in the company have been on a roller-coaster ride throughout 2011, with analysts questioning how well Akamai has responded to increasing competition. At the time of writing, Akamai was the subject of takeover rumours, with the most likely buyers cited as Google, IBM and Verizon.

Meanwhile, several telcos and carriers have launched their own CDN services, among them Level 3 (which bought its CDN service from hosting provider Savvis in 2007) and AT&T. These have done much to bring down prices, as they already own the backbone networks on which CDN services run.

To muddy the waters still further, a handful of well-funded start-ups have also proved disruptive. Edgecast, for example, has made a built a business allowing large telcos and carriers to resell its CDN services under their own branding, but has also made direct deals with large corporates such as JetBlue, Kellogg’s and ESPN.

And at the very low end of the market, cloud providers Amazon and Google now offer very basic web page acceleration services to bloggers and website operators. These services may be too ‘do-it-yourself’ for established businesses, but they do much to destroy the myth that simply providing edge servers, in the right geographical locations, is in itself a high-value service.

How to choose

These market trends are good news for CDN customers, who are essentially looking at a buyer’s market. But they still face a tough question: how to choose a CDN service in such a crowded market?

When Gartner’s Lydia Leong assessed the market in mid-2010, she noted that, while the cost differential between the most and least expensive CDNs was narrowing, “significant disparity” still existed in capability, so buyers must pay careful attention to the feature set, scale, performance and reliability of providers.

For website operators delivering content around the world, the geography of a CDN operator’s footprint is a critical consideration. CDNetworks, for example, was founded in Korea and is still the only global player with a substantial presence in China, according to the company’s Jeff Kim. “We’re also just into Russia,” he says. “We like the challenging markets – the ones where other providers will tell you it’s hard to deliver CDN.”

Likewise, Level 3’s recent acquisition of Global Crossing gives it a far greater geographical footprint in all its services, including CDN, and will help it to bring CDN to currently under-served regions such as Latin America, says Derek Gough, the company’s director of product management.

What would Luke West at Rightmove advise? “Honestly? Give a CDN service a go with some of your traffic. If it holds up, give it a go with more of your traffic. If it all works beautifully, at a price you’re happy with, give it all of your traffic.”

In a more competitive market, providers are more likely to entertain the pilot-test demands of prospective big spenders. But even for those companies happy with the CDN services they’re already using, a circumspect attitude is probably wise.

West says he always conducts a thorough service review when a CDN contract comes up for renewal, and that it is worth seeing if a more cost effective better deal is available. Switching between CDN providers, he says, is “not trivial, but do-able”.

The CDN market looks set for interesting times ahead, characterised by soaring demand and increasing competition. The entrance of players such as OnApp, and to some extent Google and Amazon, will certainly widen the pool of customers that use these services – perhaps at the expense of some of the established players. As Bredahl points out, “Business class is very pleasant, but it isn’t the right option for everyone that flies.”

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