In the second half of last year, Microsoft made the decision not to continue the build out of their own CDN for their Azure cloud platform and instead, struck a deal with Verizon to white label Verizon’s EdgeCast CDN. While no partnership deal was ever officially announced, Microsoft has confirmed the deal to me saying, “Microsoft licenses technology from many partners to complement our product offerings and to give customers complete solutions. We are happy to partner with EdgeCast to provide an integral component of the Azure Media Services workflow.” Some might think it strange for Microsoft to shut down their in-house Azure CDN, and reply on a third-party, but considering Microsoft’s approach to the market, it makes sense.
While many cloud providers like Amazon and others want to build everything in-house, Microsoft’s approach with Azure has always been to offer customers more flexibility and deeper functionality, by building the Azure platform with help from other focused solution providers in the market. They took the same approach last September when they rolled out live streaming and content protection offerings within the Azure Media Services group, partnering with Telestream and Newtek amongst others. Microsoft’s goal isn’t simply to build cloud components, but rather to offer an end-to-end ecosystem for video. The announcement this morning that GameStop will be using the Azure cloud platform to stream video game content direct to consumers and to devices in-store, shows the kind of solution that Microsoft is building with partners. Working with best of breed third party providers makes sense when competing with the likes of Amazon and Google, as offering greater product performance and depth helps Azure differentiate their service offering compared with internally built solutions from competitors.
It’s too early for me to say just how much revenue Verizon’s EdgeCast CDN will get from being the backend CDN for Azure, but it should be significant over time. Microsoft’s Azure cloud service continues to get more traction in the market and while Amazon’s cloud service has a lot more in the way of products, with the EdgeCast partnership, Azure has an opportunity to leapfrog ahead of Amazon’s CloudFront, given EdgeCast’s performance focus and CDN product development focus. Looking beyond CDN however, Azure is looking at solving the multitude of video workflow challenges, which is much more complex than just storage and delivery. Broadcasters and other media customers that need to be able to ingest, transcode, protect and deliver their content are out in the market looking for a single cloud based platform that can do it all.
Microsoft’s goal with Azure is to become a robust and easy to use platform for customers who need an ecosystem platform, as opposed to stand alone components. Microsoft still has a way to go with their Azure Media Services platform, but based on what they have done already, and the partners they have chosen, they are on the right track and will be one to watch in the new year. It also seems pretty powerful to me to have a big network player like Verizon and a big Cloud software player like Microsoft partnering up to take a serious run at the Enterprise Cloud Segment, a market where both companies have strength and Amazon and others hope to penetrate.