Even With CDN Pricing Problems, Akamai Still Not Doing Enough To Spur Growth

On yesterday's earnings call, Akamai once again said they were seeing more pricing pressure in the market and stated that they are being more aggressive on their CDN pricing. While this may sound like Akamai is finally waking up to the reality of what's taking place in the market, I don't think that's the case and they still aren't taking the necessary steps needed to grow their CDN business.

Back in December I wrote a post entitled "Akamai Getting More Aggressive On CDN Pricing, But More Steps Are Needed", and I detailed how I was seeing Akamai compete on some deals with lower pricing, but not on enough of them. Seven months later, Akamai's saying they are going to be more aggressive, but noticed they always followed that statement on the call with phrases like "with key customers" or "with key strategic customers". If Akamai has any intention of growing their CDN business again, they can't be more aggressive on pricing only with "key customers". If they have finally come to the realization that their CDN pricing is too high, then it's too high. That's the bottom line. It's not that it's only too high for "key customers", it's too high for everyone. And what every investor should be asking is, what percentage of revenue do those "key customers" make up? If those "key customers" are only responsible for lets say 20% of Akamai's CDN revenue, then lowering pricing for them really won't have much impact.

On the day of Akamai's earnings, I saw two deals where Akamai was charging a customer $10 per Mbps and that customer left Akamai for a competitor who was charging $6.50 per Mbps. This was a customer that was billing about $800K a year and Akamai wouldn't lower their pricing, but did offer to defer their payment until next year. I also heard from another major M&E customer who said Akamai charges them $0.15 per GB delivered, with no monthly commit, yet other competitors are at $0.10 per GB on the same deal. Akamai can't afford to be aggressive with pricing for only select customers.

Updated List Of Stand Alone CDNs and Telcos/Carriers Offering CDN Services

While I have been keeping a running list of CDNs for some time, back in January I had to add a section to the list just for all of the carriers and telcos who have started offering CDN services in the market. With the sudden surge of non pure-play CDNs now offering CDN services on top of their core business offerings, the list of non pure-play CDNs only continues to grow.

Here's an updated list of CDNs in the market, broken down between pure-play CDNs versus non pure-play vendors like carriers and telcos. (To make the list easier to find on my blog, all you have to do is go to www.cdnlist.com for the latest update)

Non Pure-Play CDNs

• Alcatel-Lucent (acquired Velocix 7/09)
• AT&T
• Bell (working with Limelight)
• Broadmedia
• BT (will launch by year's end)
• Deutsche Telekom (partnered with EdgeCast)
• Global Crossing (reselling Limelight and EdgeCast)
• Internap (acquired VitalStream)
• Level 3 (acquired CDN assets of SAVVIS, acquired Servecast)
• NaviSite (reselling EdgeCast)
• NTT Communications
• Pacnet (partnered with Internap)
  
• PCCW
• Reliance Globalcom (partnered with Internap)
• Tata Communications (partnered and invested in BitGravity)
• TeliaSonera
• Telecom Italia Sparkle (reselling CDNetworks)

Pure-Play CDNs

• Accelia
• Abacast
• Advection.net
• Akamai
• Amazon Web Services
• BitGravity
• BitTorrent
• CacheFly
• ChinaCache
• CDNetworks
• Cotendo
  
• Conviva
• Digital Fountain (acquired by Qualcomm 2/09)
• EdgeCast
• EdgeStream
• Grid Networks (merged with GMS 4/09)
• Highwinds
• Itiva
• Limelight Networks
• Mirror Image
• Move Networks
• Pando Networks
• Panther Express (acquired by CDNetworks 2/09)
• PEER1
• Real Broadcast Network
  
• Technicolor
• Velocix (acquired by Alcaltel-Lucent 7/09)
• Voxel.net
• Vusion (went out of business 5/09)

Before anyone starts saying it's not fair to put all these folks on a list, please read my disclaimer in my last CDN post which explains many of the differences between the CDN vendors in the market.

Related Post:

- Video CDN Pricing Drops Slightly In Q1, Other Contract Trends Noticed

Webinar Tomorrow On Video SEO: How To Get Your Online Video Discovered

Tomorrow at 2pm ET I'll be moderating another StreamingMedia.com webinar, sponsored by Grab Networks, on the topic of Video SEO and how to get your videos discovered. Attendees will learn best practices for optimizing videos for search, including:

• Automating metadata extraction and analysis for SEO
• Creating search-worthy URLs, titles, tags, captions and MRSS feeds
• Exposing keywords to search engine crawlers automatically
• Leveraging search-friendly distribution outlets like YouTube
• Available solutions to help you maximize your video SEO efforts

From developing backlinks to automating metadata generation, this webcast will provide you with the know-how to successfully optimize your online videos for search and grow your audience. There will also be an extensive Q&A session after the presentation. Presenters will be Marcien Jenckes, Co-President of Grab Networks and Mark Robertson who runs a great blog dedicated to the subject at ReelSeo.com

You can register to attend this free webinar here

Twelve Months After Launching, CDN Vusion Out Of Business, More CDNs To Follow

Vusion, a peer assisted content delivery network formerly known as Jittr Networks closed their doors about eight weeks ago and is shopping their assets.(Updated: Vusion's IP has been sold to Clarendon) Officially launching on May 5th of last year, Vusion burned through around $11M in VC funding in just twleve twenty four months. Like many of the CDNs who grabbed VC money at a time when it was being given out by the handful, Vusion was doomed from the start as they had no business model. While they were quick to point out the strengths of their technology, they were too late to the game and had no plan for how their technology would translate into revenue.

Vusion joins Panther Express and Grid Networks on the list of CDNs who in the past few months, have closed up shop or been forced to have to merge with others. Add today's acquisition of CDN Velocix, and you can see that the CDN market is starting to consolidate and not in a positive light for most of the VCs involved.

Vusion isn't the only CDN on the short list of those in trouble and we'll see a few more CDNs, mostly newer ones launched in the past twelve months, go under before the year is up.

Updated: Vusion's 14 paying customers were transitioned over to Ooyala.

Related Posts:

- Alcatel-Lucent Acquires CDN Technology Provider Velocix

- No Major Consolidation In The CDN Market Anytime Soon

- Three More CDNs Launch, Market Too Crowded

- What's The Barrier To Entry In The CDN Business? A Few Hundred Million

- New CDN Conviva Gets $20 Million In Funding: VCs, Stop The Insanity!

Alcatel-Lucent Acquires CDN Technology Provider Velocix

This morning, Alcatel-Lucent (ALU) announced it has acquired CDN technology provider Velocix. As I reported two months ago, Velocix had been in talks with various companies about being acquired and the deal with Alcatel-Lucent closed five days ago. Terms of the deal were not announced and while I have not spoken to anyone yet who can confirm my estimate, my guess would be the deal size was around $20-$25M. To date, Velocix, formerly known as CacheLogic, had raised over $50M spent about $25M, from at least four rounds of funding and was doing well under $10M a year in sales.

For Alcatel-Lucent, this acquisition was purely a technology one to get their hands on Velocix's Metro product line and they didn't acquire the company for their revenue. Velocix's Metro product will not be bundled into Alcatel-Lucent's offering and will directly target service providers like Verizon, who are some of Alcatel-Lucent's largest customers.

The Velocix Metro product will fall under the IP division at Alcatel-Lucent which reports into Steve Vogelsang, VP Of Business Strategy. I had a chance to speak to Steve yesterday about the deal and he mentioned that while it's too early for the company to comment on everything they plan on doing with Velocix's technology, they do see this as natural fit for their service provider business. Steve said that, "many of our customers and service providers have been evaluating their CDN strategy and the Metro is a really well thought out product for what the service providers need." Steve said the immediate goal is to take the Velocix product offering, productize it and start offering it to their largest customers.

When asked if Alcatel-Lucent plans to continue to operate the Velocix CDN and compete in the traditional CDN business Steve said, "we're not sure exactly how we will proceed with the CDN services but our focus is going to be providing solutions to our service provider customers." I don't see Alcatel-Lucent competing in the traditional CDN business with the likes of Akamai and Limelight since that's not what Velocix is truly setup to do and isn't a fit for who Alcatel-Lucent's customers are. That said, no current Velocix customers will be impacted and all of the licensing deals Velocix has in place with customers like Verizon simply stay as they are.

I also asked Steve how important Velocix's P2P functionality was to Alcatel-Luncent when they were evaluating the technology. Steve said that the P2P function is interesting but that most of the operators they are talking to today are looking at building out a CDN infrastructure that supports standard protocols and not P2P. He did say that when it comes to P2P, the operators are intrigued, but are still wondering how to control, manage and exploit P2P traffic.

I'll post an update to my guess on the deal size if I get more concrete details.

Related Posts:

- Content Delivery Provider Velocix Close To Being Acquired, Telco Most Likely

- Velocix Launches New CDN Offering For ISPs With Support From Adobe and Microsoft

- Velocix Acquires Live P2P Technology From Rawflow, Announces Deal With Kontiki

- Q&A With John Dillon, CMO of Hybrid CDN Velocix

2 Million Page Views Later, I Have A Lot Of People To Thank

It's been two and a half years now since I started this blog and in that time, amazingly the blog has done over 2M page views. Traffic to the blog continues to climb and is on track to do 1.5M page views this year alone. None of this would have been possible without the continued support of many other bloggers and sponsors for whom I need to thank.

A lot of my traffic comes from other writers and websites who nicely link to many of my posts. Many thanks to Steve at Last100.com, Rich at DataCenterKnowledge.com, Rob at TelecomRamblings.com, Rafat and his team at PaidContent.org, the entire crew at NewTeeVee.com and GigaOM.com, Andy at Beet.tv, Dan at Silicon Alley Insider, the team at Engadget.com, Larry at OnlineVideoPublishing.com, Pete at FierceOnlineVideo.com, Ben at OnlineVideoWatch.com, Mark at ReelSEO.com, Dave at ZatzNotFunny.com and many of the other sites, including vendor blogs, who continue to link to my content.

I also need to thank all those sites that syndicate my content including SeekingAlpha.com, Yahoo! Finance, WashingtonPost.com, NewYorkTimes.com and BusinessInsider.com

In addition to those who have linked to the blog, many of the vendors in the industry have also supported the blog by coming on board as sponsors. My thanks to the sponsors I've had over the past two years including: Adobe, Akamai, EdgeCast, Ignite Technologies, Internap, Kontiki, Level 3, Limelight Networks, Microsoft, NaviSite, NetStairs, Ortiva Wireless, PEER 1, Skytide, Tremor Media and my newest sponsors coming on board, ChinaCache, The FeedRoom and Sorenson Media.

Also, while the TypePad platform is not perfect, I have to thank them as well for providing a blogging platform that has allowed me to host and run this site for only $99 a year.

I've had a lot of fun over the past two years, have written 804 posts and received 2,987 comments. Thanks to everyone who has contributed to the conversations taking place on the blog and I look forward to continuing to hopefully write about topics that are of interest to the industry and community.

Brightcove, VMIX and Ooyala Hiring: 40 Open Positions

As the online video platform space continues to heat up, various vendors are still expanding and looking to fill open positions. Brightcove has 30 open positions across all departments of their company, VMIX has 4 open positions for business development managers and Ooyala has 6 open positions in engineering, sales and marketing.

If your online video related company has any job openings, let me know. In most cases I will highlight them here on the blog - free of charge.

Xbox Shows Off New Netflix Browsing Feature, Improved Video Quality

Starting August 11th, Microsoft will roll out a dashboard upgrade for the Xbox 360 with a bunch of new options for Netflix streaming, including adding movies to your queue without a PC. I got a chance to get hands-on with the upgrade tonight and Netflix customers are going to love what's in store for them.

The most significant upgrade made to the Netflix app for Xbox LIVE members is that users can now add movies to their Netflix queue without having to use a computer. You can now browse through 100 movies per genre based on the types of shows you've previously watched and when you find one you want, you simply add it to your queue. Browsing is simple and fast and being able to make Netflix movie selections directly via the Xbox is much appreciated. The one function that's still missing though is the ability to be able to actually search for a movie based on the title. Absent of that search function, you can only browse through the top 100 movie selections from each genre that are automatically presented to you.

In addition to the new browsing feature, Netflix videos now have better adaptive bitrate technology, which enables a smoother viewing experience when your Internet bandwidth fluctuates. Microsoft says this allows for better estimates of the user’s Internet connection and is now more accurate. If the Xbox detects that a users network condition has degraded, the Xbox can seamlessly switch to a lower stream while continuing to play out the existing buffered content. For anyone who has a broadband connection that tends to degrade in quality, this enhanced technology should help, although I didn't see a difference myself probably due to the fact that I'm on a 50Mbps FiOS connection.

While it's unclear if any of the Netflix videos are encoded at higher bitrates than before, Microsoft says the video experience will also be a better one due to the fact that the upgraded Netflix app supports improved encoding profiles that allow them to deliver higher encoded bitrate content using less network capacity.

Along with these improvements, Microsoft is also releasing a new movie parties feature for Xbox LIVE Gold members that enables them to watch a movie with up to seven of their Xbox friends. It's a pretty neat function where all the avatars sit together in a virtual theater to watch the movie and can interact with each other.

While some might be hoping to see Facebook, Twitter, Last.fm and Zune video and 1080p Instant On features in this release, Microsoft says those won't be coming out until later in the year. Considering that Netflix streaming to the Xbox 360 only launched just over six months ago, it great to see Microsoft and Netflix already updating their app and making the experience even better.

Related Posts:

- 1080p Streaming On Xbox 360 Will Require 8-10Mbps Connection For Full Quality

- Detailing Netflix's Streaming Costs: Average Movie Costs Five Cents To Deliver

- Netflix Streams 1.5 Billion Minutes Worth Of Videos To The Xbox 360

- Review, Hands-On With Netflix Movies On The Xbox 360, HD Included

Amazon's CEO Uses 8 Minute Video On YouTube To Explain Zappos Deal

You gotta love it when a company like Amazon users the power of video to get their message out. Amazon's CEO Jeff Bezos has an eight minute video uploaded to YouTube to explain the company's acquisition of Zappos. Now that's how video should be used.

As good as the content of the video is, the quality is terrible for me. Wish Amazon had used a service other than YouTube.

Sorenson Has A Winner With Their New 360 Video Platform (Hands-On Review)

Back in May, Sorenson Media, best known for their Squeeze encoding software and the Spark video codec, launched a new video platform called Sorenson 360. After being hands on with the offering for the past three months, I've come to the conclusion that it's one of the most well thought out platforms on the market for small and medium sized customers.

While the company markets their new service as a "Video Delivery Network", the new SaaS based offering is really a video platform that has been built specifically for those who may not need all the bells and whistles of more complex platforms like Brightcove or Ooyala. Sorenson's new 360 system was designed for the needs of small and medium sized businesses and bundles in transcoding, storage, management, player design, delivery and analytics all in one easy to use system, all hosted by Sorenson.

While I've personally used a lot of video platforms myself, many of them are designed for content owners who have a lot of complex needs or are trying to monetize their content. As a result, many platforms have all sorts of functionality for ad insertion and monezitation which makes the platforms quite difficult to learn and use. While there's nothing wrong with these systems and are valuable for content owners who need that functionality, there's also another large segment of the market who simply needs to get their content online quickly and easily without all the bells and whistles. That said, I found the Sorenson 360 platform to be not only easy to use, but also rich in functionality. Added 7/24: Thanks to the commenter below for pointing out that I didn't mention if the platform supports streaming based delivery. Currently, all videos are delivered via HTTP and not via streaming based protocols.

Encoding of content for the platform can be done two ways. For content owners needing maximum control and highest video quality, it's best for them to uploaded videos using the latest version of Sorenson Squeeze 5. This seamless functionality built into the new version made encoding and uploading videos from my desktop a snap, but for me, it was even easier to upload videos via my web browser. For content owners who don't have encoding software on their computer, being able to drag and drop a file into the browser and have the Sorenson 360 system transcode it is much easier. I uploaded a bunch of clips a few minutes in length and the system transcoded them very quickly.