A report out this week on CDNs from The Network World entitled The rapidly evolving state of CDNs, says that revenues will continue to grow at a Compound Growth Rate of 27% through 2019.
Its opening gambit is “CDN players are innovating at a frenzied pace to keep up with companies that are striving to meet customer demand for rich content experiences on a range of devices, while figuring out how to serve that content from both on-premise resources and hosted cloud environments.”
Content distribution networks (CDNs) allow companies to ship data of all kinds across the global internet on dedicated networks that traverse data centers. The CDN will typically save a company the hosting and peering charges that would be incurred trying to run the operation on their own infrastructure.
In terms of growth, the CDN market is projected to grow from $3.71 billion in 2014 to $12.16 billion by 2019, at a CAGR of 27%, according to a report cited by Network World, which also points to Gartner’s Lydia Leon who notes “the content is more dynamic, it’s bigger, and faster, and there’s more of it.”
The CDN industry’s growth is largely due to new, more dense CDN requirements for OTT video, which has local telcos and ISPs wanting to build their own national delivery platforms, rather than rely on sparsely populated global CDNs from global players like Akamai. Telcos are also building out open caches so that even if they have no contract with content delivery companies they can reduce traffic within their national networks.
Typically larger MNOs and telcos have realized the cost of using a third-party CDN is worth investing in constructing their own. For the thousands of business that also need to move large volumes of data around the internet, but lack the capex scale of a telco, CDNs remain a vital part of their business. A few of the telcos and ISPs have moved into offering commercial CDNs, and include Comcast, Verizon (EdgeCast) and Level 3.
In the meantime, the report notes that four main factors have driven the growth of the market, which are “a massive growth in media consumption across the board, the rise of mobile devices and applications, the blurring of lines between various cloud services, and the enterprise demand for global infrastructure.”
Mark Grannan at Forrester Research said that “there are a lot more options for enterprises now. It used to be that Akamai was synonymous with CDN, but the market saw a dramatic number of new entrants between 2008 and 2012, each gravitating towards a technical, regional or vertical niche.”
The report then points to Limelight, which offers cloud-based services for enterprises focused on gaming and media delivery, Fastly, which claims to be the only CDN that can cache unpredictable and frequently changing content such as web-store inventory data or comments sections in real time.
Other examples include Instart Logic and Yottaa, which aim to help slow commerce sites by focusing on streaming and app-sequencing capabilities respectively, and Cloudflare and Incapsula, which use DDoS and Web-app firewall capabilities to draw users to their CDNs.
CacheFly sells itself on its throughput focus, using its TCP-anycast technology and infrastructure to cut the required network hops for traffic – which it says translates into the best available CDN throughput. Aryaka targets enterprise customers with a hybrid wide-area network and CDN offering that aims to meet the enterprise software-as-a-service (SaaS) needs for redundancy.
The report notes that because these CDN vendors tend to build out capacity on top of a partner’s existing network infrastructure, rarely owning the delivery capabilities and often leasing that stack, “the value comes from the vertically integrated set of services that combines the network, hardware and software to make this possible.”
Faced with the onslaught of niche offerings, the larger players in the industry are looking to differentiate themselves by offering additional services. The report notes that Akamai, with 2013 sales of $2 billion, has acquired Prolexic (DDoS security), Verivue, Blaze (frontend optimization technology), and Xerocole (DNS security) in an attempt to round out its portfolio. And this has been good for business, as Forbes notes that the value-add services now account for more than 50% of Akamai’s overall revenues, and have a higher gross revenue. Currently, Akamai’s CDN cloud is comprised of 170,000 servers in 102 countries.
The report also says that as mobile devices are increasingly used to access online content, “CDN providers are working with mobile infrastructure vendors to push workload to the network edge. For example, vendors such as Ericsson, Alcatel Lucent, and Nokia are offering cloud radio access network (C-RAN) solutions with localized content caching – which is the beginning of that transition we pointed to earlier, which helps reduce the origin-to-user traffic flow that makes up an increasing amount of total web traffic.
This edge-caching will help reduce buffering delays, and also improve network latency, which will become increasingly important for Internet of Things applications, augmented reality consumption, fully optimized local content delivery and good old data caching. Enterprises looking to keep up with the growth of BYOD usage will also be heavily interested in these systems, and that creates opportunities for all the software companies looking to provide security and optimization services to these businesses.