Commoditization and the Future of Content Delivery Networks: Part Two

A number of software developers, like thePlatform, don’t operate any network infrastructure at all and instead offer software suites that work under the same concept of providing customers with more feature-rich ways of managing their content delivery. The future viability of these companies, though, is somewhat up in the air as larger, traditional CDNs continue to improve upon their applications and services, and the CDN market consolidates further.

Separate but Integrated and Integral
While the networks themselves may one day become commoditized, traditional CDNs don’t see that happening any time soon, despite acknowledging the split between the network and services facets of their businesses. "I would suggest that they are separate, but they can never be separated," says VitalStream CEO Jack Waterman. "There are a thousand different things you can do in any particular business situation to fit your customer’s specific needs. Regardless of how you do it, the network and the services are very much married together and part of the product offering."

Some CDNs bristle at the notion that their networks and/or services are heading down the path of commoditization. "In our view, commoditization of bandwidth does not equal the commoditization of CDNs," says Limelight Networks VP of Sales Mike Sawyer. "I don’t think that when prices go down that the product’s necessarily being commoditized. Especially in a technology business, it’s that innovation increases performance and lowers price, but that doesn’t equal commoditization."

Additionally, "CDNs are not simply bandwidth providers," Sawyer continues. "I think there’s enough differentiation in terms of what the CDNs do that that doesn’t really seem to be an issue. I see most of them focusing on building value around their primary focus. Most CDNs will have a range of customers across most verticals, but when you look at a CDN’s message, how they’re building out their services, they’re tending to continue to add value around the customers that they already have."

Tomorrow’s CDNs may evolve into even more distinct entities. Driving this differentiation will be the needs of CDNs’ core customers, which formerly were quite similar but currently are diversifying rapidly as various verticals learn how to maximize their use of streaming media. The continuing adoption of broadband and the likely eventual leap to fiber optic ultrabroadband should reward those CDNs with the network capacity to handle the growth in high-resolution streaming media. But perhaps more influential to the diversification of CDNs will be the growth of interactive and database-driven rich media experiences that utilize the bidirectional data flow capabilities of streaming media and which also will require high-powered applications to manage and monetize them.