Commoditization and the Future of Content Delivery Networks: Part One

Complicating all of this is the nature of working in a commodity-type market. When Flash Video was first released, most CDNs handled simple Flash animations but not Flash Video streaming. Within a single year, Flash Video went from a distinguishing factor to a standard feature. "In all cases it’s been treated and behaves completely the same way as commoditized bandwidth," says Buck. "The differentiators aren’t holding together."

Get Personal
To combat this sense of sameness, some CDNs are turning away from trying to develop additional features, services, and value-adds for their customers as a whole and instead are focusing on developing solutions for specific business problems that individual customers are facing. "How we want to differentiate ourselves for our customers is really simple: professional services," says VitalStream’s Waterman. "We are in the process of building our professional services organization whose sole purpose is to work with our sales staff to better understand what our customers want product-wise so we can build custom solutions to their individual business challenges."

Even though VitalStream will be focusing on developing solutions for specific customers, the energy they spend on those projects often can be shared among a number of other clients with similar problems. "Most of the time when you do something for one customer, it turns out that there are ten to fifteen other customers who are interested in the same thing," says Waterman. "Because of this you are able to amortize your investment more quickly."

To better the chances of establishing a long-term relationship, CDNs like VitalStream are pushing to integrate their services further into their customers’ businesses. "When you start to get into the culture of your customer’s business, you start to understand the problems that they face," says Waterman. "Hopefully our customers will come to think of us as a problem-solver whenever they have a distribution challenge."

In addition, CDNs are pushing the envelope when it comes to helping their customers realize the full potential that online media delivery offers. "When we’ve been doing big projects like the Olympics, we believe that the leaders [in online content distribution] have not thought about everything they can do on the Internet," says Akamai’s Curis. "We help them realize that potential by showing them how they could make more money by delivering more content over the Internet."

Growing the Market
With its recent acquisition of Speedera—formerly the second-largest CDN—Akamai has cemented itself as the undisputed leader in the CDN market. But the company says it isn’t interested in simply gobbling up all of the competition; instead it wants to use its size to drive the growth of the whole pie. "We believe that the market has not reached its full maturity yet. It has size today, but it will grow," says Curis.

And because of the realities of today’s marketplace, anybody who’s able to drive more traffic through and generate more revenue from the Internet is giving every CDN the opportunity to build its business. Central to this is the increasing penchant among content publishers in the last year to no longer rely on a single CDN for their content delivery. "Someone says, ‘I think I need to be safe, and I don’t want to risk all my business on one provider,’" says Mirror Image’s Buck.